A Broward County commissioner is urging Congress to enact legislation that he claims could reduce insurance prices for Florida customers “immediately” – by up to 25%.
Broward County Commissioner Steve Geller announced the potential savings on Thursday, which would be a major comfort to South Florida residents who pay some of the highest premiums in the country.
They are documented in a new economic impact analysis on legislation submitted by Democratic Representative Jared Moskowitz, whose district includes portions of Broward and Palm Beach counties.
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“If this legislation passes, we predict that this will cut homeowner insurance immediately,” Geller went on to say.
Rep. Moskowitz’s plan, known as the Natural Disaster Reinsurance Plan, proposes to reduce insurance rates for customers in states that participate in the program by reducing the need for insurers to obtain reinsurance. The plan only covers home insurance, including windstorms, and not flood insurance.
Reinsurance is insurance purchased from another insurance company by an insurance provider, such as those in Florida, to protect itself against the possibility of a significant claims event, such as a natural disaster. Reinsurance allows corporations to transfer some of their insurance responsibilities to another insurance provider.
Geller claims that the cost is passed on to customers. He leads the South Florida Regional Planning Council, which includes officials from Palm Beach, Broward, Miami-Dade, and Monroe counties.
At a news conference on Thursday, the group released a new assessment on the economic impact of Moskowitz’s bill, which is currently before Congress.
According to the research, average house insurance premium renewals in Florida increased by 68% over the previous two years, the fastest increase in the country. It also discovered that Florida, with $2.9 trillion in property exposure, is the most vulnerable state to severe storm damage.
According to the analysis, Broward, Miami-Dade, Monroe, and Palm Beach counties are exposed to $636 billion, or approximately 22% of total statewide damage in combined residential and commercial usage.
“As a county commissioner, one of my primary issues is the affordability of housing. “One of the major factors contributing to the high cost of housing, both home ownership and rental, is the high cost of windstorm insurance,” he said while delivering the study to the press on Thursday.
Also read: California Insurance Commissioner Proposes New Rule for Fairer Homeowners Rates
Geller stated that the law would allow insurance firms to acquire less reinsurance, resulting in savings that could be reflected in homeowner prices.
However, the bill does not guarantee that insurance companies will cut their rates based on the savings. According to Geller, each state’s insurance commissioner will be responsible for enforcing lower prices.
Bill Would Change How Businesses Get Insurance
Geller said most insurance companies cover themselves for something that only happens once every 250 years. The study says that kind of event would cause about $94 billion in claims damage.
Geller said that the bill would only let insurance companies take out new policies for a once-every-50-year event that would cause $63 billion in damage.
If the claims for damages were more than that amount, the federal government would put out bonds to cover the gap. Those would be paid back by state governments in 10 years through a small tax on home insurance payments. The study says that the savings are greater than the possible costs.
“That will cut the cost of reinsurance by about half,” he said. “That will mean that every homeowner’s insurance policy in the state will be about 25% cheaper.”
Rep. Moskowitz put the bill in the House last year.
Geller hopes that the new report will help get more people to support the bill. The bill was sent to the House Committee on Financial Services, but progress has been slow since it was first presented last year.