Over the objections of some of the largest business associations in the state, the Senate Banking and Insurance Committee on Tuesday approved a bill that would eliminate the state’s ability to collect $222.4 million in additional premiums for the Florida Hurricane Catastrophe Fund.
Filed by Sen. Jeff Brandes, R- St. Petersburg, the bill (SB 1454) would do away with what’s known as the “cash build-up factor” premium for the fund.
The premium is paid by homeowners who have property insurance that includes coverage for wind losses.
The so-called Cat Fund, which provides backup coverage for insurers, had a balance of $14.9 billion as of Dec. 31 and is projected to end 2018 with a balance of $14.1 billion.
That projection includes the cash build- up factor being collected with 2018 premiums, minus about $2 billion in projected claims payments for losses due to Hurricane Irma in 2017.
Associated Industries of Florida and the Florida Chamber of Commerce opposed the bill.
Florida Property & Casualty Association lobbyist William Stander also opposed the bill and warned that the House’s version of the measure (HB 97) wouldn’t stop at the cash build-up factor and would make other changes to the catastrophe fund, which he said “requires substantial vetting.”
The cash build-up factor was initially approved in 2009 when the Legislature worried that the balance of the catastrophe fund was about $4.5 billion but the potential obligations were upward of $28 billion.
Florida Chamber of Commerce lobbyist Carolyn Johnson said her group appreciates Brandes’ efforts to reduce rates but said it sees the catastrophe fund as “a long term investment and stabilizer” for the insurance market.
But Brandes told members that eliminating the cash build-up factor would yield an immediate savings of between 2 percent to 4 percent.
“If you want to reduce rates, this is an immediate 2 to 4 percent rate reduction for your constituents and my constituents,” he said.