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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