HB 143: The Latest Republican Tax Hike in Disguise

The 2014 legislative session begins March 4th. TFS will be providing in-depth coverage of notable bills and their progress in both chambers from now until Sine Die and beyond.

Rep. Jake Raburn

What could go wrong?

Rep. Jake Raburn (R-Valrico) from District 57 represents one of the safest Republican House seats in Central Florida, an 80% white, largely rural locale you may have taken I-7through on your way to someplace else. He also, according to campaign finance reports, has lots of friends in the insurance industry who like him so much they’ve given more than $7,000 to his reelection campaign despite his lack of meaningful opposition. 

Some of this probably accounts for Rep. Raburn’s introduction of HB 143, a bill Relating to Florida Insurance Guaranty Association (FIGA). FIGA is a safety net for policyholders established in 1970 by a Democratic legislature and signed into law by moderate/oddball Republican Governor Claude Kirk, a former insurance agent. It’s basically a group composed of the majority of insurance companies who write property and casualty policies, and it’s required by law to raise funds amongst itself to pay out claims in the event an insurer goes belly up.

Under current law, if your house burns down and your insurance company runs doesn’t have the cash reserves to cover your claim, FIGA will pay that claim by assessing member insurers. The possibility of such an occurrence is factored into the rates that policyholders pay. Everyone pays a little more to make sure no one gets completely ruined in the event their insurer goes broke. Few people adore their insurance company, but it’s a fair enough system and it works.

Rep. Raburn is here to fix all that. He’s got another idea as to who should pay up when an insurer overextends itself and runs out of money: you. His bill would change the state statute that created FIGA to allow insurers to charge individual policyholders a fee of up to 4% per year in the event of insurer insolvency. Individuals who already pay in to a system designed to guard against insolvent insurance companies will now be subject to paying even more to cover for delinquent insurers.

You could say that HB 143 is like one of the many hidden tax increases authored by our “No New Taxes”-style Tallahassee leadership that has made Florida a more expensive place to live in recent years — driver’s license and registration fees doubled, tuition increased, delays in unemployment benefits, welfare recipients paying out of pocket for their own Civil Rights-violating drug tests, etc. Except that Rep. Raburn’s proposal is even worse: at least taxpayers are getting something back or at least avoiding losing services when they pay into the general revenue of state government.

HB 143 is a flat-out giveaway to the insurance companies paid for by Floridian homeowners who are already facing insurance problems including sinkhole coverage, rising flood insurance and complications from being dumped by Citizens onto the rolls of brand-new, potentially shady companies selected by the Scott administration on the basis of political favor.

Currently the bill resides in its first of four committees of reference. It has attracted a Senate companion sponsored by Sen. Tom Lee (R-Brandon). Whether Sen. Lee will use his seat on Senate Banking & Insurance to fast-track this bill remains to be seen but I wouldn’t bet against it unless I had the kind of sweetheart deal many insurers are going to get should this legislation pass. Either way, we’ll keep you updated.

3 comments

  1. Pull that bill · ·

    Actually, thanks to Rep. Bill Hager’s questions to the bill in Insurance & Banking and the obvious problems with it the committee members had after the questions, the sponsor had it TP’d. If it even comes back to the committee it will be strongly amended.

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  2. This is not a tax hike in disguise, it lowers the total costs of assessments to insurance consumers and makes the process fairer. State Farm and the large companies ambushed the bill because they like making it harder to do business in Florida and don’t even care about their own policy holders which this bill helps. Ryan, your article is either completely ignorant or a hatchet job, or both.

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  3. Hi Jay.

    I gather you work in the insurance industry and have a certain bias here, but you also have technical knowledge in this area so I’m happy to have this conversation with you. I’ve spoken with people who know these issues and did not write this article willy-nilly, but am open to being wrong and of course it’s important that people talk through difficult problems like the ones that often attend insurance legislation.

    A few questions: Who, in your view, is better positioned to bear risk stemming from the possibility of insurer insolvency, individual policyholders or the industry collectively via FIGA?

    Is it even possible to assess policyholders directly to compensate others whose insurers have gone bust, i.e. does the OIR even have a way of doing so? Isn’t the lack of a mechanism for dealing with this on such a basis the reason FIGA and insurance guaranty associations in the other 49 states were created in the first place?

    Thanks for reading and for your comment, Jay. Looking forward to speaking with you further.

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