Florida Senate leaders have put forth a new tax strategy aimed at alleviating the financial strain on homeowners grappling with skyrocketing insurance costs in the state. Under the proposed plan outlined in Senate bill SB 7074, properties valued at $750,000 or less could see a reduction of 1.75 percent in insurance premium taxes. Additionally, flood insurance policies enacted or renewed after July 1 would be exempt from premium taxes for a period of twelve months.
The introduction of these measures has sparked lively discussions among industry experts regarding their potential impact and target demographic. Insurance professionals are keenly aware of the challenges faced by clients in terms of affordability and availability of coverage. Many homeowners are forced to make difficult decisions, often opting to reduce coverage to manage insurance expenses.
Proponents of SB 7074 argue that the bill is crafted to provide relief to policyholders by offering tax cuts and credits. It is estimated that these measures could result in savings of $363 million over a span of two years. However, critics, particularly Democratic leaders, argue that the proposed measures do not comprehensively address the underlying issues within the state’s insurance market and are disproportionately skewed towards business interests.
Florida’s insurance landscape is characterized by a myriad of challenges, including exorbitant premiums, extreme weather events, and a litigious environment, all of which contribute to market instability. Despite the addition of six new insurers, the market remains volatile, leaving many Floridians struggling to afford coverage. Economist Benjamin Keys has expressed concern over the potential ramifications on the real estate sector and the broader economy if affordable insurance becomes inaccessible.
While the proposed legislation offers some relief to homeowners, the savings are modest at best. For instance, Forbes estimates that for a $750,000 home, the annual savings could amount to approximately $870.72. Democratic Representative Anna Eskamani and industry experts like Mark Friedlander have raised doubts about the efficacy of the tax cut plan, labeling it as insufficient and merely a token gesture.
Efforts to address insurance affordability in Florida have historically faced challenges. Previous initiatives such as the My Safe Florida Home program struggled to meet demand and ultimately ran out of funding. The Senate’s tax relief proposal extends beyond insurance, encompassing a broader $900 million package with sales tax holidays and small business allowances, signaling the GOP’s commitment to tax reduction.
With unanimous support from the Finance and Tax Committee, SB 7074 now awaits further deliberation in the Senate. If approved, the bill will proceed to a House vote and may ultimately be ratified by Governor Ron DeSantis, with a potential effective date of July 1, 2022.
Meanwhile, Florida’s insurance market has seen the emergence of several new players, including Condo Owners Reciprocal Exchange (CORE), Tailrow Insurance Company, Mainsail Insurance Company, Orion180, Orion180 Select, and Orange Insurance Exchange, each aiming to address the evolving needs of policyholders in the state.
