TALLAHASSEE -- Florida's new governor signed a bill yesterday that could lower the cost of property insurance for residents, although it means the state could have to pay billions of dollars if a catastrophic hurricane hits.
The measure was passed by lawmakers in a special session Monday. It was the first signed by new Governor Charlie Crist.
The bill aims to cut the skyrocketing cost of home insurance that many Florida residents, especially those on the coasts, have seen since the harsh hurricane seasons of 2004 and 2005.
Estimates of how much the law would save property owners range from 5 percent for many inland residents to nearly 20 percent for those on the coasts.
A key provision forces an immediate rate decrease for Florida's largest insurance company, state-created Citizens Property Insurance Corp. , and cancels another planned increase.
The bill also seeks to lower rates to make more state backup insurance available to private insurance companies. By taking on more of the responsibility to pay out of the Hurricane Catastrophe Fund if there is a large storm, the state will reduce insurers' ultimate risk, cutting their need to raise rates.
But the state and its residents take on that risk.
The state's second-largest insurer, State Farm Florida Insurance Co., and other private industry officials generally don't like most of the bill, contending that it discourages companies from doing business by artificially suppressing rates.