House Moves To Reduce Impact Of Citizens Property Overhaul

April 30, 2013

Leadership in the state House prefers its changes to Citizens Property Insurance Corp. rather than the more sweeping measure that the Senate has already approved.

Through an amendment, the House on Monday replaced language in a 101-page Senate measure (SB 1770) with the House’s more narrow approach (HB 909), absent vast portions of the bill senators approved on April 25.

Both proposals are aimed at reducing the number of policies in the state-backed insurer.

There are a number of differences – but the bottom line on the bill comes down to what it will mean for homeowners. Citizens rates have been kept artificially low, and changes could mean higher premiums – a fear that has made many coastal lawmakers skittish.

“We’ve made a commitment to not raise rates and we feel the Senate version would raise rates,” said Rep. Doug Holder, R-Venice, a sponsor of the House effort. “The governor has been pretty clear on his message from beginning to end that he’s not going to support anything that has any kind of perceived rate increase and we feel that our product is a product that is suitable in all three bodies of government.”

The House is expected to vote on the bill Tuesday before sending the amended measure back to the Senate.

“The bill that we’ve amended sends it back to the Senate with no provisions that will raise rates,” said Rep. Mike Fasano, R-New Port Richey, a frequent critic of Citizens. “The consumer is protected for another year.”

The Senate bill maintains a 10 percent cap on rate increases for current Citizens policy holders, but new policyholders would have to pay “actuarially sound rates,” which could result in premiums having to double to reach “actuarially sound totals” for coastal areas with wind-only accounts.

Opponents have said that could slow down the housing recovery, making homebuyers unwilling to purchase in coastal areas where they’d be Citizens customers.

The House bill doesn’t move new customers into rates that are considered more actuarially sound.

Sen. David Simmons, R-Maitland, said he looks forward to negotiating the final bill with the House, but says the Senate bill won’t raise rates for current customers.

“These people who are getting the lower rates are not even paying what the other Citizens policy holders are paying,” Simmons said.  “This isn’t some huge increase in rates that exist, this is simply bringing them up to parity if in fact someone was to purchase.”

The House measure would keep also unregulated surplus line carriers out of a new clearinghouse that is intended to take the least risky policies out of Citizens and put them into the private market. The House, in fact, sent a message on that point on Monday, rejecting by a 51-65 vote a separate measure (HB 7093) focused strictly on the creation of the clearinghouse that would have allowed surplus line carriers to participate.

Unlike regulated domestic carriers, surplus line companies are not required to have their rates approved by the Florida Office of Insurance Regulation.

The House bill also doesn’t give the governor a direct say in the selection of Citizens’ president, and maintains the state-backed company’s exemption from bad faith litigation.

Gov. Rick Scott has pushed for the creation of an inspector general to oversee daily issues within the company, following reports last year of lavish spending by executives. 0

Overall, the House proposal has 19 changes that are in the Senate bill, including the creation of an inspector general position, the clearinghouse, prohibition on coverage for new structures seaward of the coastal construction control line, and a requirement that policy holders sign a statement that acknowledges an understanding of their liability risk.

The bill doesn’t include 36 other provisions that are in the package.

Among the differences: lifting of Citizens’ exemption from bad faith litigation; requiring all non-residential policies to be actuarially sound; reintroducing coverage for screened enclosures and carports on mobile homes with a minimum insured value of $3,000; requiring members of the Citizens board of governors to be confirmed by the Senate; and changing Citizens’ president from a board of governors’ appointment into an executive director position selected by the governor and chief financial officer.

Also, the Senate bill reduces the maximum value of property that could be covered from $1 million to $500,000 by 2019, while the House is proposing the cap be lowered to $700,000 by 2017.

by The News Service of Florida


2 Responses to “House Moves To Reduce Impact Of Citizens Property Overhaul”

  1. Carolyn Bramblett on May 1st, 2013 5:09 am

    I agree with David Huie Green. I also believe the State has no business being in the insurance business. Let the private sector work it out. Let people be responsible for their own lives.

  2. David Huie Green on April 30th, 2013 8:02 am

    Much looks good here but insurance rates which don’t cover expected expenses are fiscally foolish.
    If you can’t afford to insure a given property in a given place, maybe you don’t need to have it. Don’t force others to pay for your luxuries.

    David for wise construction

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