Senate Budget Committee Advances Citizens, CAT Fund Reform

The Senate Budget Committee voted to support a bill Saturday morning that could reduce how much private insurers -- and in turn their customers -- must immediately pay to cover costs that the dangerously large Citizens Property Insurance Corp. cant handle after a storm.

Sen. Steve Oelrich, R-Gainesville, the sponsor of the bill, said the widely supported SB 1346 is designed to keep private companies solvent after a storm and is aimed at attracting more insurance companies into the Florida market.

This bill does not change Citizens liabilities to pay claims after a storm, Oelrich said at the start of the more than three-hour committee meeting. It only addresses how Citizens collects assessments to pay those liabilities.

The committee also tacked on a late amendment from Budget Committee Chairman J.D. Alexander, R-Lake Wales, which could reduce the Florida Hurricane Catastrophe Relief Fund from $17 billion to $15 billion.The fund is used to help private insurance companies following a storm.

Alexander said the move, along with a possible 2 percent increase in premiums from the private insurers, should make the CAT fund more stable for future bonding.

Oelrichs bill reduces costly coastal policy lines from 6 percent to 2 percent and reduces assessments that would be placed on customers of private companies after the standard 15 percent assessment imposed on Citizens approximately 1.4 million customers in the year after a storm.

Currently private insurers have 30 days to pay any post-storm shortfall experienced by Citizens, with the fiscal impact expected to be drawn the following year from the private insurance companys customers.

Under the proposed bill, the private companies wouldnt be required to pay Citizens the full amount, thus reducing the annual impact to its customers.

The full Senate must hear the bill -- backed by the Florida Chamber of Commerce, Associated Industries of Florida, the Florida Office of Insurance Regulation, and Citizens -- within the week, for it to reach Gov. Rick Scott.

The House has already approved its version of the reform effort, HB 1127. The House bill does not include Alexanders late amendment.