by Michele Newbern Gillis
Staff Writer
John Sebree, the Florida Association of Realtor’s vice president of public policy, said the Florida Legislature’s special session on insurance proved to be very productive and surprising.
“As soon as Governor (Charles) Crist announced that there was going to be a special session, we started sending him our ideas,” said Sebree. “We never thought he would do all this. We never thought the legislature would go quite as far as they did. In fact, I’m quite surprised that they did some of the things that they did.”
Sebree attended the Amelia Island Nassau County Association of Realtors meeting last month at the association’s office to give an update on insurance legislation and information on what the upcoming legislation’s next big hurdle will be - property taxes.
He said the insurance bill that finally passed was 167 pages.
“There is a really great summary on the FloridaRealtor.org website,” said Sebree. “You can flip through and see the pieces that really mean a lot to you like deductibles and things like that.”
Sebree said the session was also very focused on Citizens Property Insurance Corporation.
In 2002, the Florida Legislature passed a law that combined the Florida Residential Property and Casualty Joint Underwriting Association (FRPCJUA) and the Florida Windstorm Underwriting Association (FWUA). This resulted in the creation of Citizens Property Insurance Corporation which more efficiently and effectively provides insurance to, and serves the needs of, homeowners in high-risk areas and others who cannot find coverage in the open, private insurance market.
He said many have part of their property insurance through Citizens and even more will now.
“Going into the session, Citizens was the devil, but coming out of it they are the angels,” he said. “Everyone realized that we would be up a creek if we didn’t have Citizens at the rate that national insurance companies are leaving. There were some major reforms to Citizens.”
Sebree said parts of the state were having trouble getting any commercial real estate insurance at all. But, with the new bill, Citizens now will be able to write a lot more commercial policies.
He said there were problems with homestead and non-homestead properties and now Citizens is able to write all the non-homestead properties.
Sebree said insurance companies were having trouble affording re-insurance which was causing rate hikes locally.
“We were able to expand the Florida Hurricane Catastrophe Fund (CAT Fund), which is actually the provider of re-insurance,” he said. “It is a government program that sells reinsurance to the insurance companies but at a much lower rate.”
According to the bill, when insurance companies buy re-insurance from the CAT Fund, they have to pass on 100 percent of their savings to the consumer.
“That is making a huge difference,” he said.
The session also did away with the Panhandle building code, which had separate building codes just for the western area of Florida.
“So, now the state does have one unified building code which sends a huge message to the world’s insurance market,” he said. “We think that will make a huge difference as well.”
Sebree was surprised at some of the outcomes.
“When I said that I thought the governor went a little farther than I thought he would go, it had to do with cherry picking,” he said “There are 27 companies in the state of Florida that are writing automobile insurance policies that don’t write property insurance here, but write property insurance in other states. The new bill says if you are writing automobile insurance here and property insurance in another state, you have to write property insurance in Florida. Maybe some of the Progressives and others of the world will jump into the property insurance market as well.”
Sebree said large insurance companies such as AllState and State Farm have threatened to leave the Florida market, which would leave a lot of unattended policies.
“The ones that say they are leaving might leave and leave huge numbers of policies behind,” he said. “We may find that Citizens is the only property insurer in Florida for awhile. That’s happened before. You always go through peaks and valleys, but since Citizens has been allowed to expand through this bill, they are now allowed to write all perils. I can tell you that the insurance companies hate that. They hate the fact that Citizens doesn’t have to be just a wind-only provider anymore. They can write all perils and that is huge competition. The reason the legislature did that is because they think the big insurance companies needed more competition. The more competition in the marketplace, hopefully, the lower rates will be.”
As far as property taxes, he said a big issue is the people who don’t want to move because of the taxes they would have to pay on the new house.
“It is a huge problem,” said Sebree. “We are supporting a form of portability where you would able to take the Save Our Home differential that you have built up with you to another property. If this passes, you will have a lot more silver dollars passed out. (Amelia Island gives silver dollars to members for closings each month).”
He said there needs to be limits on the portability.
“We are supporting portability by a local option,” he said. “It would pass on the constitution, but in your county you could choose for full portability or reciprocity with a neighboring county or any county.”
For the 2008 elections, Sebree said to make sure to vote “no” to the Hometown Democracy, a ballot initiative that says any land use changes would have to go before the voters.
“This is overkill. If it passes, it will shut down development in Florida,” he said.
Photos by Michele Newbern Gillis