In response to Florida’s escalating insurance costs, Senate leaders have issued a tax reduction strategy proposing a 1.75 percent cut on insurance premium taxes for homeowners with properties valued at $750,000 or below, sparking a debate over its adequacy and focus.
Amid an ongoing insurance crisis that threatens the affordability and availability of coverage for millions of Floridians, the proposed Senate bill (SB 7074) seeks to alleviate financial pressures by cutting insurance premium taxes and offering credits to policyholders. However, Democrats argue the measures fall short of addressing the broader insurance challenges facing the state, accusing Republicans of prioritizing business interests over consumer relief.
Florida’s property insurance market is in turmoil, escalated due to a perfect storm of factors. Homeowners in the Sunshine State face the highest insurance premiums in the nation, with an average annual cost of $6,000, dwarfing the national average of $1,700, Newsweek previously reported. The financial burden is compounded by the increasing frequency of extreme weather events, a litigious climate encouraging costly lawsuits, and a large number of insurers withdrawing from the state.
Even with the addition of six new insurance companies operating in Florida, the result is a precarious market where many Floridians struggle to afford necessary coverage, jeopardizing their ability to maintain or purchase homes and threatening the stability of the state’s housing market. Benjamin Keys, an economist at the University of Pennsylvania’s Wharton School, recently told Newsweek that without affordable insurance, homeowners can’t secure mortgages, crippling the real estate sector and, by extension, the broader economy.
It’s a situation that threatens individual financial stability and poses a risk to the state’s housing market and overall economic health, according to Keys.
However, the bill introduced by Senate leaders aims to provide some relief against the backdrop of soaring insurance costs, albeit slightly.
Savings by Housing Bracket
Under SB 7074, homeowners could see modest savings on their insurance premiums. More broadly, considering that the average insurance premium paid by Floridians is $6,000, the 1.75 percent savings would be $105 per month, or $1,260 annually.
But, the bill proposes a tax cut on properties valued at $750,000 or below.
According to estimates by Forbes, the average premium paid for a $750,000 home in Florida is $4,146. With the proposed tax cuts, the 1.75 percent savings would translate to approximately $72.56 per month, or $870.72 annually.
Similarly, for a $500,000 home, Forbes estimates an average premium of $2,810, with the tax cuts potentially leading to savings of $49.18 monthly and $590.16 annually. Homes valued at $350,000 and $200,000 could see estimated monthly savings of $35.46 and $23.35, respectively, translating to annual savings of $425.52 and $280.20, according to Forbes.
While the savings offer some financial respite, Democratic Representative Anna Eskamani told the Florida Phoenix that the Republican-led tax cut plan does not adequately address the underlying issues of the insurance crisis. Eskamani pointed out that while any tax relief is welcome, the proposed measures only offer a band-aid solution to a problem requiring more comprehensive reform.
“We need to do more if we are going to truly help Floridians navigate this insurance crisis,” Eskamani reportedly said to the Florida Phoenix.
According to the Tallahassee Democrat, industry insiders, including Mark Friedlander, a spokesperson for the Insurance Information Institute, agree with Eskamani, saying that the savings from the proposed bill are “minimal,” but noted that “any reduction is good.”
There is also criticism that the plan disproportionately benefits businesses, with insufficient focus on the needs of ordinary Floridians grappling with unaffordable insurance premiums.
Beyond insurance tax cuts, the Senate’s $900 million tax relief package encompasses a range of measures, including sales tax holidays and increased allowances for small businesses, which signals an effort by GOP leaders to deliver on tax reduction promises.
What’s Next?
After unanimous support by the Finance and Tax Committee on Tuesday, SB 7074 awaits further approval by the Senate. If passed, the bill will move to the House for a vote, and then be sent to Governor Ron DeSantis.
If signed by DeSantis, the bill will take effect on July 1 of this year.
Joe Raedle/Getty Images
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.