PONTE VEDRA BEACH, Fla. -- Homeowners insurance isn't cheap, especially for those living on the coast, but some state lawmakers want to reduce the Hurricane Catastrophe Fund, which could result in even higher rates for policy holders.
The fund was established in 1993 after Hurricane Andrew, and grew even more after a combined 14 storms ravaged Florida, one right after another, in 2004 and 2005.
Since then it has swollen to more than $17 million. Bills introduced in both the Florida Senate and House this week could soon reduce the fund by $3 million over the next three years.
Its purpose is to cover damages if a major storm hits the state and insurance companies can't pay all their claims, as was the case in 2005.
Action News spoke with one local homeowner who said her large insurance company canceled her policy that year, exited the state entirely, and left her to foot the bill.
"Nobody would write a new policy because our home was older and needed to be renovated after the storms. It was awful. We had leaks all over," said Susan Knight.
That's when the state's Hurricane Catastrophe Fund stepped in to help thousands of homeowners like Knight. Now, efforts to reduce the fun could put more responsibility back on small private insurance companies that need to gain stability, but it would put the burden on policy holders.
"Everybody's going to be affected by it," says Brightway Insurance Agent Matthew Carlucci.
Carlucci says small private companies now dominate the market, but the state hasn't yet gained enough confidence in them to completely exit the industry.
"Ultimately that's who we should have the confidence in if we have a claim. If the state could become more confident in our private companies being able to cover the home, then we wouldn't need that fund. They don't have that confidence right now."
But Carlucci supports lawmakers efforts, saying he believes the fund is higher than what is needed today. He says higher rates could result in fewer policy fees that are used to recoup money from past storms, and the state could use fund money in other ways. In addition, the private insurance market might finally recover, which some lawmakers think will reduce the amount of claims that aren't paid in the future.
"We just need a few years, maybe just one or two, and then I really think that the market and prices are going to stabilize."
If the cut is approved it would take effect on July 1.
