Homeowners insurance information

Senate passes homeowner's insurance bill tougher on companies
By Julie Patel South Florida Sun-Sentinel
April 17, 2008
The Florida Senate approved a sweeping property insurance bill Wednesday touted as a "homeowners' bill of rights."If legislators last year were focused on lowering homeowner's insurance rates, this year they're set on drafting an array of laws to hold insurers accountable and equip the state to be a tougher watchdog.Insurance industry representatives said insurers who weren't scared away from Florida last year will be this year — if this bill becomes law. And that is far from certain since House leaders have reservations about much of it."This is about every consumer getting a fair shake at having a fair and square, straight-up relationship with their carrier," said Sen. Jeff Atwater, R- North Palm Beach, a sponsor of the bill. "It's really time that consumers deserve to be front and center in the insurance debate rather than it being about what the insurance industry needs."
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Industry representatives issued several statements after the bill passed 32-7."This bill attempts to punish insurance companies ... at the expense of encouraging a competitive environment," said Liz Reynolds, Southeast region manager of the National Association of Mutual Insurance Companies. "It could have a dangerous and chilling effect on the private [insurance] market."The bill would:Hold insurers accountable to state antitrust laws and increase maximum penalties for violating state laws, from $2,500 to $25,000 for breaking a law unknowingly and from $20,000 to $100,000 if it's deemed intentional.Require insurers to get state approval before raising property insurance rates and prohibit them from using arbitration panels when there's a disagreement with state insurance officials.Force insurers to pay undisputed claims by homeowners within 90 days. Some insurance companies have a strategy of boosting profits by paying less in claims, Atwater said. And companies sometimes push customers to quickly accept a smaller payment or face years of litigation while claims go unpaid.Make insurers notify policyholders 180 days before dropping their policies. If insurers plan to drop more than 10,000 policies in one year, they must come up with a plan to shed them over time.Extend the freeze on Citizens Property Insurance Corp.'s rates for six months, from January to July 2009. Rates then would increase in phases over three years.The bill will be sent to the House, which doesn't have its own version because there has been lackluster support for it. Atwater and bill co-sponsor Sen. Steve Geller, D- Hallandale Beach, said they plan to meet with several key House members this week to try to sway them."It will not pass in the House in its current form," Geller said. "I don't know what will survive, but there's going to be a lot of negotiation."Sen. Jeremy Ring, D-Margate, is among the senators who opposed the bill. He said Citizens' rate freeze would pose a risk if a hurricane wipes out state insurance funds."We froze Citizens' rates last year, betting that a hurricane won't hit, and it was a good bet. Now we want to take the same bet for three years straight? I'm not willing to take that bet," Ring said.Another controversial part of the bill is a provision to continue to allow Citizens to insure homes in high-risk areas worth more than $1 million. Sen. Al Lawson, D-Tallahassee, has said the provision is " Robin Hood in reverse.""We should not be subsidizing million-dollar homes," he said.It's not a subsidy because the pricier homes are generally more hurricane-safe and their owners pay more in premiums, Atwater said. Citizens officials said the loss from Hurricane Wilma at homes worth more than $1 million was $4.17 per $1,000 of coverage purchased, compared with $107.69 at homes valued at less than $1 million.An idea that has been popular in years past was withdrawn after a dearth of support this year. Sen. Mike Fasano, R-New Port Richey, proposed an amendment that would have required insurers that offer homeowner's insurance in other states to offer it in Florida if they wanted to sell auto insurance.Insurance Commissioner Kevin McCarty urged the House to follow the Senate's lead. "I hope the House now will also see the importance of this legislation for Florida consumers and how it will enable my office to continue to ensure that companies are keeping insurance available and affordable," McCarty said.Julie Patel can be reachedat jvpatel@sun-sentinel.comor 954-356-4667.

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Freddie Mac Eases Declining Markets Policy

Freddie Mac Eases Declining Markets Policy On May 2, 2008, Freddie Mac announced changes that ease the impact of its declining markets policy. As a general rule, under this policy, if a property is located in a declining market, the maximum loan-to-value ratio (LTV) is reduced by 5 percentage points. Under the revised policy, for mortgages with maximum LTVs equal to or more than 95%, lenders are not required to reduce the maximum LTV ratio below 95% if the following requirements are met:
The mortgage is used to purchase the home or for a "no cash out" refi.
The mortgage is secured by a one unit residence (not a 2-4 unit residence or a manufactured home).
The mortgage application receives an "Accept Risk Class" from Freddie's automated underwriting software, Loan Prospector. Freddie is also allowing additional costs to be included in refinancings of Freddie-owned or -securitized mortgages that have already been exempt from the declining markets policy. The announcement also reminds affected parties that the following types of mortgages are exempt from the declining markets policy: FHA/VA, section 184 Native American, and section 502 rural housing mortgages.Fredde Mac BulletinJeff Lischer 202-383-1117, Marcia Salkin 202-383-1092

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