Two political leaders in South Florida have proposed a congressional bill that aims to immediately lower the cost of homeowners property insurance in the state and across the nation.
The proposal promises to cut insurance premiums by 25%, as first reported by the South Florida Sun-Sentinel. The bill comes from U.S. Rep. Jared Moskowitz and Broward County Commissioner Joe Geller.
Apart from lowering the cost of insurance premiums, the bill also aims to lower the amount of reinsurance that insurers have to buy. Currently, insurance companies are required to have enough coverage to be ready for a once-in-a-130-year storm. The bill will bring this down to a once-in-a-50-year storm.
If such a storm occurred, the Treasury Department would be required to issue 10-year Treasury notes to cover damages beyond what would be caused by a once-in-a-50-year storm. Geller estimates that such a storm would cost insurers $62.5 billion.
The bill also noted that Florida would pay back the Treasury note by charging homeowners with property insurance in the state a special assessment of up to 3% of their premiums for up to 10 years.
In total, the bill is expected to save Florida homeowners about $838 million in premiums over five years. Annual insurance cost increases will also be reduced.
It is unclear if the bill will pass Florida's Legislature. The plan has not yet moved in Congress and currently has no Senate counterpart.
Florida's Soaring Insurance Premiums
The proposal comes amid the skyrocketing cost of home insurance in Florida. In the last three years, homeowners insurance premiums in Florida have increased by 102%, according to Fox News, citing data from the Insurance Information Institute. The outlet noted that Florida homeowners may see lower rate increases this year and not a reduction.
"We don't expect rates on average to decrease, but we're hoping it will be a more moderate level of increases compared to what we've been seeing the last few years," Mark Friedlander of the Insurance Information Institute told the media outlet.
The average cost of insurance in Florida last year was $6,000, which is three times the national average. In Cape Cod, for instance, flood insurance soared from $1,800 to $4,800 in a year.
Furthermore, over a dozen insurance companies have pulled out of the state after an increase in weather-related events.
