Whether there will be significant rate hikes to offset the increased exposure of having only one deductible “may very well depend” on developments this year, said Rey Becker, vice president of personal lines for the Property Casualty Insurers Association of America.

Should 2005 produce another series of monster hurricanes, insurers might reevaluate their rating processes and the models they use to project losses, he said. Additionally, the state legislature is planning to reconvene in March, and Mr. Becker noted that there “may be a desire to tinker further” with deductible issues.

However, Mr. Becker also noted that House Bill 9A applies only to a homeowners windstorm deductible and that deductibles for other types of damage that typically occur during hurricane season will be unaffected by the law. “Theres still something of a safety valve, from the companies perspective,” he said.

Passage of the legislation represents a victoryif not a complete onefor the industry, which had lobbied to have the program funded from the states general revenue. The industry was successful, however, in moving the burden of administering the program onto the shoulders of the state Department of Financial Services.

Under the bill, the state Catastrophe Fund will reimburse the affected policyholders and then make up the expense by collecting a rapid cash buildup surcharge along with the premiums insurers are charged for participating in the fund over the next five yearsan added cost that will be passed on to consumers.

While insurers are not administering the program, PCI Regional Manager William Stander said they will be required to cooperate with the state by providing claims information and to issue notices to policyholders. However, providing that information shouldnt be a problem, he said, adding that PCI supported the overall bill and was pleased with its passage.

Another aspect of the bill Mr. Stander said was “of concern, although not to the point of troubling,” prohibits insurers from retroactively changing their deductible policies. Some companies, he noted, had stated early in the hurricane season that policyholders would not be required to pay multiple deductibles and instead absorbed those costs. Under the law, those carriers are barred from charging the extra deductibles retroactively, for which insureds would have been reimbursed by the state.

“Its interesting,” Mr. Stander said, “that the legislature chose to incentivise everything thats wrong and disincentivise everything thats right.”

Florida lawmakers also announced that a joint committee would be formed to examine property-casualty insurance issues before the start of the next regular legislative session in March.

Mr. Stander said several issues the industry is hoping to have examined involve sinkholes, building codes and a possible lowering of insurer thresholds before collecting from the Hurricane Catastrophe Fund. For many companies, he noted, no single hurricane of 2004 caused enough losses to trigger fund payments.

AIAs Ms. Pulliam also noted that “we expect legislators to look at an even broader range of public policy issues, including more consumer options in terms of deductibles, changes to the Hurricane Catastrophe Fund, and an examination of the state-run Citizens Property Insurance Corp.”

In addition, last week the governor and his cabinet again approved an emergency rule barring insurers from canceling or non-renewing insurance policies of storm victims whose homes have yet to be repaired until 60 days after repairs are made. The emergency rule took effect as of Jan. 1, and is set to expire March 31, 2005.

“Thousands of Floridians still waiting for help to rebuild or repairs to be done can breathe easier thanks to action we took today,” said state Chief Financial Officer Tom Gallagher, a member of the cabinet who pushed for the rules adoption. Mr. Gallagher also lobbied the legislature to make the rule a part of state law during the recent special session.

Reproduced from National Underwriter Edition, December 30, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.