Senate takes up Citizens overhaul
MARCH 30 • A proposal to shrink Citizens Property Insurance Corp. by raising premiums by as much as 25 percent a year and limiting the types of policies the state-run insurer can issue passed its first Senate hurdle Tuesday.
Following debate and public testimony from residents who traveled from as far away as Key West, the Senate Banking and Insurance Committee approved SB 1714 on a 6-4 vote. Citizens is Florida’s largest property insurer with nearly 1.3 million policies.
The rate hikes are needed, backers say, because the state-run pool is charging rates that don’t nearly cover the risks, and the program is based on levying assessments on most insurance customers, a reliance the bill sponsor said is unsustainable and patently unfair.
“Socialism failed in Moscow,” said Sen. Alan Hays (R-Umatilla). “It’s going to fail in Miami and Orlando as well.”
The bill’s biggest critic, Sen. Mike Fasano (R-New Port Richey), said most coastal residents are living in areas where private insurers won’t go and if they did would have to charge rates that many property owners couldn’t afford.
“I’ve got people back home who cannot afford not to have Citizens,” Fasano said. “The industry has abandoned them. What do we tell those people?”
Beyond the rates hikes, which could not exceed a 20 percent statewide average, the bill would prevents Citizens from insuring homes valued at more than $1 million beginning Jan. 1, 2012. By 2016, the home must be valued at $500,000 or less to be eligible for Citizens coverage.
“It’s dead wrong to perpetuate the life of Citizens,” Hays said “We’ve got 85 percent of people of Florida on the hook so that 15 percent of citizens can have insurance.”
Among the other provisions, the bill:
• Prohibits the use of public adjusters for Citizens customers.
.
• Prohibits Citizens from offering commercial, non residential policies (about 8,377 policies now in force.)
• Restricts sinkhole coverage to the primary residence and not ancillary buildings.
• Prevents insurers from levying assessments on non-Citizens policies until policyholders within the pool
are charged a 15 percent surcharge to be paid upon renewal, termination and cancellation.
Citizens traces its roots back to 1992′s Hurricane Andrew, but was created in its current form in 2002 to cover coastal policyholders that private insurers wouldn’t touch. It typically charges rates below what private companies say they can charge.
Lawmakers in 2007 froze Citizens rates until Jan. 1 2010. Since then, rate hikes have been capped at a statewide average of 10 percent. The rates, even insurance officials agree, are actuarially unsound.
“What we tell those people is the truth,” Hays said. “We tell them it’s our fault. We have to take responsibility for the mess we’ve invented.”
Following debate and public testimony from residents who traveled from as far away as Key West, the Senate Banking and Insurance Committee approved SB 1714 on a 6-4 vote. Citizens is Florida’s largest property insurer with nearly 1.3 million policies.
The rate hikes are needed, backers say, because the state-run pool is charging rates that don’t nearly cover the risks, and the program is based on levying assessments on most insurance customers, a reliance the bill sponsor said is unsustainable and patently unfair.
“Socialism failed in Moscow,” said Sen. Alan Hays (R-Umatilla). “It’s going to fail in Miami and Orlando as well.”
The bill’s biggest critic, Sen. Mike Fasano (R-New Port Richey), said most coastal residents are living in areas where private insurers won’t go and if they did would have to charge rates that many property owners couldn’t afford.
“I’ve got people back home who cannot afford not to have Citizens,” Fasano said. “The industry has abandoned them. What do we tell those people?”
Beyond the rates hikes, which could not exceed a 20 percent statewide average, the bill would prevents Citizens from insuring homes valued at more than $1 million beginning Jan. 1, 2012. By 2016, the home must be valued at $500,000 or less to be eligible for Citizens coverage.
“It’s dead wrong to perpetuate the life of Citizens,” Hays said “We’ve got 85 percent of people of Florida on the hook so that 15 percent of citizens can have insurance.”
Among the other provisions, the bill:
• Prohibits the use of public adjusters for Citizens customers.
.
• Prohibits Citizens from offering commercial, non residential policies (about 8,377 policies now in force.)
• Restricts sinkhole coverage to the primary residence and not ancillary buildings.
• Prevents insurers from levying assessments on non-Citizens policies until policyholders within the pool
are charged a 15 percent surcharge to be paid upon renewal, termination and cancellation.
Citizens traces its roots back to 1992′s Hurricane Andrew, but was created in its current form in 2002 to cover coastal policyholders that private insurers wouldn’t touch. It typically charges rates below what private companies say they can charge.
Lawmakers in 2007 froze Citizens rates until Jan. 1 2010. Since then, rate hikes have been capped at a statewide average of 10 percent. The rates, even insurance officials agree, are actuarially unsound.
“What we tell those people is the truth,” Hays said. “We tell them it’s our fault. We have to take responsibility for the mess we’ve invented.”
Posted by Lisa Walker on Wednesday, March 30th, 2011 at 4:31 am
Filed under Today's Top Stories · Tagged with Citizens, property insurance
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CS/SB 1714: Citizens Property Insurance Corporation
GENERAL BILL by Banking and Insurance; Hays
Citizens Property Insurance Corporation; Discontinues policy discounts relating to the Citizens Property Insurance Corporation after a certain date. Directs the corporation to provide coverage to certain excluded residential structures but at rates deemed appropriate by the corporation. Provides that certain residential structures are not eligible for coverage by the corporation after a certain date. Prohibits the corporation from levying certain assessments with respect to a year's deficit until the corporation has first levied a specified surcharge, etc.
EFFECTIVE DATE: upon becoming a law
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