Bill seeks changes to property insurance
People frequently ask me how I come up with something to write about every week. Frankly, sometimes I ask myself the same question when facing a blank screen, but whenever I’m afflicted with writer’s block I can count on Citizens Insurance to navigate me out of it.
Early in February, the Senate Banking and Insurance Committee released the rough sketch of a bill imposing massive changes on the property insurance market. The draft bill is attempting to move much of the state’s insurance risk into the private sector and away from Citizens Insurance. This position supports Gov. Scott’s often expressed concern that Citizens is undercutting the private market with its artificially suppressed rates leaving taxpayers liable to assessments if a once-in-a-lifetime storm hits the sunshine state.
Some of the provisions outlined in the draft bill are:
Making it more difficult for homeowners to be covered by Citizens by excluding homes valued above $300,000 and non owner-occupied properties. Current homeowners would have to re-qualify annually in order to maintain their Citizens policy, and if a private insurer offered within 15 percent of Citizens’ rates, the homeowner would be not be given the option to renew the Citizens policy.
Citizens Insurance must charge rates higher than average rates in the private market.
Additional fees may be charged to cover the cost of backup insurance by both Citizens and private companies.
An insurance inflation factor may be used by both Citizens and private companies to raise premiums faster than currently allowed.
Rates that are higher than regulators allow can be charged if homeowners agree to the higher charges.
Increase the cap on Citizens, allowing rate increases from 10 percent to 15 percent.
If any or all of these provisions actually become law, it will inevitably result in higher insurance rates starting in 2014. This is especially important to our area, since South Florida and the Tampa Bay region incur the highest insurance costs in the state.
Citizens Insurance has 1.3 million policyholders comprising 23 percent of the Florida market, and lawmakers have long wanted to shrink Citizens. The underlying assumption of the effort to move policies out of Citizens is that increasing competition among private companies will prevent homeowner rates from skyrocketing. The contention is that in the private market there are moderate prices available to homeowners, and shrinking Citizens does not necessarily require homeowners to pay more.
Some of the proposals in the bill were provided from Citizens Insurance, including using some of the company’s $6.2 billion surplus to back up smaller private companies through the use of a clearing house. This would allow policies to be offered to the private market before they go into Citizens, with the final objective of allowing private insurers to make enough of a profit giving them the incentive to stay in the Florida market.
Naturally, there are plenty of state legislatures who would never consider even the possibility of inflicting additional costs on Florida homeowners, no matter how much the Citizens Insurance board tells them the state is at risk. With so much of what goes on in the Florida legislature related to Citizens Insurance motivated by politics it’s impossible to speculate what the future holds. The draft bill is still being worked on by the committee and will get a hearing before the end of February so there is more to come.,
Personally the only thing I like about Citizens Insurance ,or any discussion about insurance, is that it is a constant stream of topics for me to write about. Writers block is something I’ll probably never have, unless our insurance issues are resolved. Guess I’m safe.
