Florida Homeowners Insurance Update

The Palm Beach Post explains the numbers behind the Florida Senate's home owner insurance proposal. Much of the money (and risk) would come from expanding Citizens Property Insurance Corp.

Under the plan, the insurance industry could start buying reinsurance from the state-financed Florida Hurricane Catastrophe Fund once the industry has $2 billion in aggregate claims in the state. Insurers could purchase up to $20 billion in the deeply discounted reinsurance from the catastrophe fund.

Once the insurers' claims hit $22 billion, the state would assume all risk up to $71 billion under the Senate plan. Insurers would not be required to pay any premiums for that coverage as they had for the $20 billion worth of reinsurance, but would be required to pay 10 percent of the losses.

The $69 billion that the insurance industry would receive from the catastrophe fund and super fund, less the premiums and 10 percent that insurers would have to pay, would leave taxpayers holding the bag for $60 billion, the board says.

The Senate plan promises to spend up to 10 percent of the state's $74 billion budget, or $7 billion, to cover the super-fund. The difference would be made up by a three-year, one-cent sales tax increase.

The Florida House is not biting. That is likely because the insurance industry donated $24 million during the 2006 election cycle.

In other news: Governor Charlie Crist have been backing his rhetoric with action. Crist has proposed to ban insurers from canceling policies for up to four years. There would be exceptions. Such as companies allowed to cancel for nonpayments. But the proposal is tougher than the ban after Hurricane Andrew. The insurance industry will fight this.

Update: Marco Rubio is strongly against the Crist/Senate bill.

House Speaker Marco Rubio said lawmakers shouldn't act on Senate plans to lower rates by expanding the state-run Citizens Property Insurance Corp. and adding to policyholders' risk of extra charges after major storms.

''We're shifting a tremendous burden on the shoulders of taxpayers,'' the West Miami Republican said. ''The comfort level with many of my members is not there.''

Would Rubio rather have a FEMA bail out and other states paying the bill post-hurricane? Some reporter should ask him that. It wouldn't hurt to ask him about his campaign contributions.