House Citizen's Insurance Package Takes Off

By: Michael Peltier, The News Service of Florida
By: Michael Peltier, The News Service of Florida


A House panel on Wednesday kicked off that chamber’s attempt to shrink the state-run insurance pool by raising rates, and phasing in restrictions meant to force coastal residents with expensive properties into private insurance.

By an 11-3 vote, the House Insurance and Banking Committee approved a measure (HB 1243) aimed at reducing the number of policy holders who get their insurance through Citizens Property Insurance Corp., which now covers nearly 1.3 million of the riskiest properties in the state.

Like its Senate companion (SB 1714) the House plan allows Citizens to raise its rates up to 25 percent a year for individuals and 20 percent for groups over the next several years to replenish a fund that all sides agree is underfunded and not actuarially sound.

“This bill will not only make Citizens the insurer of last resort, it will create jobs as well,” said Rep. Jim Boyd, R-Bradenton, the House sponsor of the bill.

Like its Senate companion, which passed its first committee stop on Tuesday, the bill would reduce the fund’s exposure by limiting the value of homes it insures. After Jan. 1, the bill would restrict Citizens coverage to homes valued under $1 million. By 2016, Citizens would only insure homes valued under $500,000.

Backers of the plan also say Citizen’s rates are about half of what they need to be to pay claims in the event of a catastrophic storm. Currently, in the event of a major storm, most property and automobile insurance policyholders would be forced to pay an assessment to make pay the claims of those in Citizens.

“The Citizens model is not sustainable,” said Rep. Ben Albritton, R-Bartow. “There are parts of the state that are supporting others. That is unsustainable and, I must say, grossly unfair.”

Heather Carruthers, the mayor of Monroe County, said her constituents have no choice but to be insured by Citizens. Raising rates, and limiting what Citizens will cover would have a devastating impact on smaller homeowners all along the Keys, she said. Assertions that higher rates would somehow produce a vibrant private market are unrealistic.

“There is no competition in the Keys,” Carruthers said.

Unlike the Senate plan, the House version does not prohibit the use of public adjusters to settle claims. Insurance companies have argued that public adjusters raise the cost of insurance by increasing the payouts to customer. Some consumer advocates say public adjusters are needed to level the playing field with insurers.

Despite such differences, opponents say the measure would continue to allow rates to double for Citizens policyholders over the next four years, a leap lawmakers made necessary by actions taken to freeze Citizens rates a few years ago. Opponents say policyholders shouldn’t have to pay for that mistake now.

“I just worry about the rates and rate hikes were imposing on policyholders,” said Rep. Janet Cruz, D-Tampa.

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  • by Wilsey Stevens Location: Wakulla County on Mar 31, 2011 at 01:30 PM
    If this happens,Many of us will lose our homes, our mortgage requires homeowners insurance,This is just a way for rich people to take our property, to many of us Citizens is the ONLY way we can get it.Just one more attempt of Rick Scott to feed the rich and destroy more people, I dont remember any big storms for the last several years, so how has Citizens Ins. Lost money. This is just wrong, but then its Rick Scott pandering to Insurance companys, He should be tring to find a way to reduce the cost not increase. Some body remind him he is supposed to serve the People NOT just the rich ones.
  • by Fuming Mad Location: Pasco County on Mar 31, 2011 at 09:51 AM
    So the GOP legislatures idea of creating jobs is to make more jobs for the parasite insurance companies. For those thinking that high rates happen on waterfront only, you are wrong. My wife and I had an 1800 sq. ft. house 5.5 miles from the water in an area not requiring flood insurance. Being proactive we paid for the flood insurance anyway. STATE FARM sends three letters in one year raising our rates due to hazard studies. We had put 20% down, had a mortgage of $943 a month. At the end of the three letters our mortgage increased to $2460 a month to pay for the insurance! Citizens was just underway at the time and we could not get it. Had to sell the house to someone who bought it outright to AVOID having to pay insurance companies. Thank you GOP for making State Farm and other companies some more record profits on the backs of the citizens. Maybe we can take out a loan from GE, after all they made over 10 billion last year and paid ZERO taxes! I guess it's time to incorporate...
    • reply
      by Vicious_fish on Mar 31, 2011 at 10:53 AM in reply to Fuming Mad
      Thanks for making my case. You have to be wealthy in order to live in a waterfront area, and that is due to the "McMansions" that people are building in them. Time was, a beach house was a small simple thing that was relatively inexpensive, since people had common sense and knew they were probably going to lose it at some point to an event. They would simply rebuild. Common sense has now gone the way of the Dodo, and I for one amtired of subsidizing someone elses' dream lifestyle.
    • reply
      by Cat on Mar 31, 2011 at 02:47 PM in reply to Fuming Mad
      Thank the GOP. The chairman of GE is best buddies and heads a commission for Obama. A good share of the money GE is making comes from the green energy push.
  • by Anonymous on Mar 31, 2011 at 08:21 AM
    Yeah, my heart is bleeding for all of those beach house owners. They want their "private beach" supported by my tax dollars. They should not be building on the majority of the sites down there anyway.
    • reply
      by Ever thought... on Mar 31, 2011 at 09:43 AM in reply to
      Why is it the first thought is some wealthy beach house owners... there are a ton of fishermen and people in the local fishing industry living in coastal towns, that private insurance companies will literally not insure. Mainly because of state regulations that prevent them from making their rates match the risk. That was the whole reason Citizen's Insurance was created, after the storm season where we had 4 major hurricanes make landfall it was nearly impossible for anyone living within 15 miles of the coast to get a new policy from many of the private companies. As far as those "private beach" house owners, keep in mind a MAJOR part of panhandle industry is renting those things out, which in a month bring in 10 times the amount of tax dollars then you bring in a year. (sales tax and hospitality tax). They more than support themselves tax burden wise, and bring a lot of money into the state through our tourism industry. But again it isn't just beach houses sitting on sandbars that are affected but people who have homes within 15 to 20 miles of the coast, including the small coastal fishing communities.
      • reply
        by Yes I have thought... on Mar 31, 2011 at 10:24 AM in reply to Ever thought...
        Because It's not just "first thought'. It is a fact that the most impact occurs to the structures immediately adjacent to the water, the vast majority of which are wealthy. Their "contribution" is negligible when compared with the other 99% of us that do not own a first tier home. Your are taking a risk and fighting nature when you build right on the water. You should incur 100% of the risk. As for "wealthy" beach house owners not necessarily being wealthy, just try buying one. If you can't stand the heat, get out of the kitchen with the rest of us.
  • by Dave Location: Panacea on Mar 31, 2011 at 07:22 AM
    What about the properties that only have citizens as an option since other insurance companies won't write those policies. THANKS FEMA and the LEGISLATURE!anybody know how to sell a house on the coast that no one can afford to buy because of insurance rates?
    • reply
      by Vicious_fish on Mar 31, 2011 at 08:22 AM in reply to Dave
      They want their cake and eat it too. Should have thoght about that before they bought it.
    • reply
      by Wilsey Stevens on Mar 31, 2011 at 01:35 PM in reply to Dave
      We would be lucky if we could sell before our mortgage holder forecloses because we cant pay for or get Insurance.
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