Insurance Law to Help You Weather Rate Hikes; Reinsurance for Carriers Could Save Homeowners 22.2 Percent
Karkaria, Urvaksh, The Florida Times Union
Byline: URVAKSH KARKARIA
First Coast homeowners could see average property insurance savings of up to 22.2 percent due to recent legislation that allows carriers to buy reinsurance from the state, typically for less than they would get on the private market.
That's good news for many Floridians suffering sticker shock, as their property insurance bills have recently clocked double-digit percentage increases.
State regulators released details of the rate reduction Thursday.
Under legislation signed into law in January, insurance companies can buy reinsurance from the Florida Hurricane Catastrophe Fund typically at lower rates than they would get on the private market. In return, they are expected to pass on those savings to customers.
The rate reduction requirement does not apply to insurance companies that do not buy reinsurance from the Catastrophe Fund. Insurers buy reinsurance to help offset the cost of paying claims after a major storm or other catastrophe. The escalating cost of reinsurance has forced many insurers to scale back coverage or exit the Florida insurance market.
Insurance companies must make filings using the lower rates. The reduced rates will be effective June 1 for new policies, and on existing policies upon renewal, following June 1.
Savings, statewide, will fluctuate with homeowners in the high-risk coastal areas enjoying greater rate reductions. For instance, while First Coast homeowners can expect rate cuts of between 10.2 percent and 22.2 percent, those in the hurricane-heavy Miami area anticipate discounts of 52.8 percent.
Most companies can expect to cut more than 40 percent on average off the cost of the hurricane portion of customer's premiums, which makes up a substantial percentage of the total policy premium, according to the Associated Press. …