A Broward commissioner is pushing Congress to pass legislation he says could lower insurance rates for Florida customers "immediately" — and by as much as 25%.
The prospective savings, which would come as a huge relief to South Florida residents impacted by some of the highest premiums in the country, were revealed by Broward County commissioner Steve Geller on Thursday.
They are detailed in a new economic impact report on legislation filed by U.S. Rep. Jared Moskowitz, D−Parkland, whose district includes parts of Broward and Palm Beach counties.
“If this legislation passes, we predict that this will cut homeowner insurance immediately," said Geller.
READ MORE: How Florida’s home insurance market became so dysfunctional, so fast
Dubbed the Natural Disaster Reinsurance Plan, Moskowitz's billaims to lower insurance costs for customers in states that opt-in to the program by scaling back the need for insurance companies to purchase reinsurance. The plan only covers home insurance, including windstorm, not flood insurance.
Reinsurance is insurance that an insurance provider — like those in Florida — purchases from another insurance company to protect itself from the risk of a major claims event, such as a natural disaster. With reinsurance, companies pass on some of their insurance liabilities to the other insurance company.
Geller says that cost is passed on to customers. He chairs the South Florida Regional Planning Council, made up of representatives from Palm Beach, Broward, Miami-Dade and Monroe counties.
At a press conference on Thursday, the group shared the new report on the economic impacts of Moskowitz's bill, which is currently before Congress.
According to the report, average home insurance premium renewals rose 68% in Florida, the fastest increase in the country in the past two years. It also found that with $2.9 trillion in property exposure, Florida is the most at-risk state for catastrophic property damage from storms.
Broward, Miami-Dade, Monroe and Palm Beach counties have exposure of $636 billion or about 22% of the statewide total damage in both residential and commercial uses, the report stated.
“As a county commissioner, one of my major concerns is the affordability of housing. One of the major factors contributing to high cost of housing, both home ownership and rental, is the high cost of windstorm insurance,” he said, presenting the report to members of the press Thursday.
Geller said the bill would allow insurance companies to purchase less reinsurance, a saving which he said could be reflected on homeowners' bills.
The bill doesn’t guarantee that insurance companies will lower their rates based on their savings, though. Geller says each state’s insurance commissioner will need to enforce the lower rates.
Bill would change how companies insure themselves
Most insurance companies insure themselves for a 1-in-250 year event, Geller said. The report estimates an event like that would translate to about $94 billion of claims damage.
Geller said the bill would allow insurance companies to reinsure for only a 1-in-50 year event – or $63 billion in damages.
If claims damages exceeded that amount, the federal government would issue bonds to pay for the difference. Those would be paid back by state governments within 10 years using a small percentage tax on homeowner insurance premiums. The savings outweigh the possible costs, according to the report.
“That will lower the cost of reinsurance by about 50%, and that will result in a reduction in every… homeowner's insurance policy of about 25% statewide,” he said.
The House bill was filed last May by Moskowitz. It's pending in the House.
Geller hopes the new report will bolster support for the bill, which was referred to the House Committee on Financial Services but has since stalled after it was introduced last year.
