Florida lawmakers have largely failed to produce lower rates in their attempts to tinker with the state’s home insurance markets, but that doesn’t stop them from trying. On Dec. 17, state Sen. Jeff Brandes, R-St. Petersburg, filed the bill in response to rising flood insurance rates for thousands of Floridians under the federal Biggert-Waters Flood Insurance Reform Act.
The idea behind it, Lloyd Dunkelberger, of Halifax Media Services, reported, “is to entice more private insurance companies into a market dominated by the National Flood Insurance Program.”
If that idea sounds familiar, it might be because the Legislature has previously tried — through lax regulation and limits on a state-run insurer — to draw more private insurers to Florida’s property insurance market.
How has that worked out? Florida has the most expensive homeowners insurance in the country — double the national average. Of course, those high insurance rates aren’t all the fault of the Legislature. Despite its eight years without hurricanes, Florida is still considered a risky proposition and most major insurers have deserted the state’s coastal areas.
But the Legislature’s failure to hold down property insurance rates should make Floridians cautious about the new bill’s intent to encourage private competition in the flood insurance marketplace.
Brandes’ legislation attempts to offset rising premiums for thousands of Floridians because of reforms to the National Flood Insurance Program.
Biggert-Waters, which aims to reduce a $24 billion deficit in the federal program, allows premiums for residential property to rise to market rates.
The premiums for current homeowners would increase over the next five years, but new buyers of those homes would have to pay market rates immediately.
While flood insurance rates in some cases could triple or quadruple for some older, low-lying properties, Florida TaxWatch, a nonpartisan research institute, estimates that premiums will rise for 13 percent of Florida’s subsidized policyholders.
Recent attempts in Congress failed to delay the reforms, set to take effect Wednesday. But Brandes’ bill raises questions for legislators considering the proposal and for Floridians who — if the bill becomes law — might someday have to live with it.