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Florida Moves to Ease Homeowners' Insurance Premiums

In a special session summoned to confront the state's insurance crisis in January, Florida lawmakers imposed new regulations on insurers and expanded the state's role in shouldering real estate risks that private insurers won't carry. Several other states are considering similar legislation.

Florida's new law is designed to trim homeowners' premiums and protect policyholders through a basket of measures.

To reduce insurance costs, it offers:

* Options for property owners to buy less insurance, by raising deductibles, excluding contents of the home from coverage, and other means.

* Options to drop windstorm coverage if the mortgage lender for the property agrees.

* Possible subsidies to help low-income residents pay premiums.

* Relaxed capital requirements for the state's Hurricane Catastrophe Fund, which provides reinsurance.

* Repeal of a new rate-increase for customers of the state-run Citizens Property Insurance Corp., which was created to serve as the insurer of last resort for property owners who can't get private coverage.

* Authorization for Citizens to broaden its revenue streams - and thus spread risk among more policies - by writing multiperil policies (e.g. auto, renters, etc.) instead of just windstorm coverage, which is one of the toughest corners of the insurance business. This broader rate base is expected to save the state-run firm $300 million by improving its bond rating.

* Permission for Citizens to offer competitive premiums, eliminating a rule that required the state's last-resort insurer to charge the highest premiums in the market.

To protect policyholders against possible abuse and fill a capacity gap in the reinsurance market, the law includes some new restrictions on private insurance companies while providing them access to back-up insurance from the state's Hurricane Catastrophe Fund. State insurance regulators are also allowed to waive a deposit requirement for foreign-based reinsurance companies, a measure intended to attract new capacity to the market. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com

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