Forum

What. Property insurance reform legislation.

Issue. Revised bill likely to evolve further.

Impact. Rein in cost drivers such as sink hole claims.

Lawmakers are taking another crack at property insurance reform this year on the heels of last year’s veto by former Gov. Charlie Crist.

But even with Crist out of the way, and a much-debated part of last year’s bill removed, controversy remains.

However, the need for reform also remains.

The policy count for the state’s Citizens Property Insurance Corp. rose again in 2010, after a two-year decline, to 1.03 million policies. Total policies are approaching 1.3 million and expected to exceed 1.4 million this year by one estimate.

Intended as a last-resort market, Citizens now has 18% of the state’s residential market. That tops the next highest — State Farm Florida Insurance Co. — with 12%.

Policyholders are moving to Citizens from State Farm, which made a deal with state regulators to reduce its policy count and risk exposure — rather than abandon the state — in exchange for more moderate rate relief than originally sought. Others are coming from several failed insurers.

Citizens doesn’t have enough liquid assets to pay the $21 billion in claims projected to result from a 1-in-100-year hurricane. Citizens’ policyholders can be assessed up to 15%, and most other policyholders can be assessed up to 6% if that’s not enough to cover a shortfall.

Both Citizens’ and non-Citizens’ policyholders can be hit with an additional 10% “emergency” assessment if Citizens still can’t meet its obligations. Together, all those assessments may have to cover a $7 billion gap.

Also contributing to the problem is that many of the state’s domestic insurers are still feeling financial strain even after five years without a major hurricane hitting the state.

In 2009, 60 of the 206 residential insurers in the state reported reductions in surplus, the funds available to pay claims. Underwriting losses (when claims and expenses exceed premiums) were reported by 100 companies. Recent failures inhttp://www.applyfor-mortgagesonline.com/forum?mingleforumaction=addtopic&forum=109.0clude Northern Capital, Magnolia and Coral.

According to Kyle Ulrich, senior vice president for public affairs for Tallahassee-based Florida Association of Insurance Agents, the solvency problems continue. “Carriers’ surplus has been reduced over the last 12 months and even over the last quarter,” Ulrich says.

more at http://www.review.net/section/detail/insurance-resurrection/