Crist Introduces Bill To Lower Homeowners Insurance Premiums

Today, U.S. Representative Charlie Crist (D-St. Petersburg) announced introduction of the Fueling Affordable Insurance for Homeowners Act, or FAITH Act, to stabilize the home insurance market in Florida and across the nation where excessive reinsurance costs are driving up premiums and driving insurers out of the market.

Crist's legislation would provide a federal backstop for catastrophic losses by issuing loans to state insurance commissioners for insurance costs over a pre-specified threshold. States would repay these loans over the next 10 years at low interest rates made available through the Full Faith and Credit of the U.S. Treasury. Similar to Terrorism Risk Insurance, in place since 2002, this bill would eliminate the uncertainty for insurers that drives the need for excessive "risk-of-ruin" reinsurance coverage, stabilizing markets, increasing competition, and lowering premiums.

"While Florida's government is busy fighting culture wars, our people are facing a chaotic and deteriorating property insurance market, driven by excessive reinsurance at exorbitant rates," said Rep. Crist. "With hurricane season right around the corner, premiums are increasingly unaffordable, and carriers are leaving the market altogether. Floridians cannot wait for bold action to bring down premiums, and that's exactly what my bill would do."

“Reinsurance is the largest expense for homeowners insurance companies, and those expenditures ultimately get passed on to consumers through their insurance premiums,” said Paul Handerhan,  president of the Federal Association for Insurance Reform (FAIR). “Creating a federal catastrophic excess of loss (CAT XL) reinsurance backstop for the most severe natural catastrophes will stabilize an increasingly volatile insurance sector being driven by the increased frequency and severity of catastrophic weather events. If this legislation is codified into law, consumers will enjoy more market competition, increased insurance product offerings, and significantly less rate pressure on their insurance premiums for natural catastrophe coverage."

“This simple plan will dramatically reduce insurance rates for Homeowners, Condominium and Co-Op owners, and renters,” said Broward County Commissioner and former President of the National Council of Insurance Legislators Steve Geller. “Reinsurance in Florida today can make up 50-60% of the cost of insurance premiums, and this program will very substantially reduce the cost of reinsurance. It does this without any cost to the State or Federal Governments, by simply using the vast resources of the Federal Government to guarantee payments to insurance companies for the worst natural disasters. These payments would be repaid to the federal Government by the States, but at T-Bill rates, not at the vastly inflated rates charged by reinsurers. Florida residents are struggling to find available and affordable insurance. This plan will take care of both availability and affordability of insurance.”

“Thanks to Rep. Crist for his leadership on this critical housing affordability issue. I believe property insurance is the next affordability crisis, especially in the state of Florida,” said Brandi Gabbard, Vice Chair St Petersburg City Council. “I am optimistic about the prospect of this legislation, and look forward to working with him further to implement meaningful relief for property owners.”

"As Florida's Insurance Consumer Advocate, my job was to be a voice for the people," said Sean Shaw, former Florida Representative and Insurance Consumer Advocate. "The people are hurting right now, and Tallahassee is asleep at the wheel. I'm thankful to Charlie Crist for taking bold action with his FAITH Act that will stabilize Florida's broken insurance market, lower premiums, and most importantly, benefit consumers."

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