The legislation expands on a commercial rate deregulation bill adopted last year, which allows an insurer to implement rates for most forms of commercial insurance without the approval of the Office of Insurance Regulation (OIR). The bill this year expands the exemption to all commercial lines.

In addition, the bill will reduce the commercial auto fleet threshold from 20 vehicles to just one, AIA says. The rates will still be reviewed for adherence to the legal standards of not being excessive, inadequate or unfairly discriminatory.

SB 178 was approved by the Senate's Banking and Insurance Committee and is currently before the Budget Committee. Then it will go before the full Senate.

The measure is also supported by the Property Casualty Insurers Association of America (PCI).

A Faster 'Path' for Citizens

In the meantime, companion bills (HB 1243/SB 1714) aimed at speeding up a "glide path" to actuarially sound rates for the state's last-resort insurer advanced through committees in the state House and Senate.

The Florida Insurance Council (FIC) says the OIR and the state-run Citizens Property Insurance Corp. participated in developing the legislation.

Under legislation adopted last year, Citizens—whose rates had been frozen for three years prior—was permitted to increase rates 10 percent per policyholder. The new legislation would allow an increase of 20 percent and would reduce eligibility from homes valued at $1 million to homes valued at $750,000 starting Jan. 1, 2014.

Eligibility would again be decreased to homes valued at $500,000 on Jan.1, 2016.

The measure is intended to continue to reduce Citizens' exposure—making it more difficult to get a policy with Citizens. The supposed last-resort insurer currently competes with the private market and is the largest writer of property insurance in the state, in part because rates had been frozen for several years, which made it easier for a homeowner to get a policy.

Currently homeowners are permitted to turn to Citizens if rates they receive in the private market are 15 percent higher than the rates at Citizens—which was easier to accomplish as Citizens rates were frozen.

The proposed legislation would also raise the rate differential eligibility standard to 25 percent.  

Without rates to match the risk, Citizens writes, Florida taxpayers could pay heavily in the form of assessments if the state-run insurer needs money to pay claims after a large storm.