Amendment alters bill that bumps homeowners out of Citizens Property Insurance
Mar 5, 2012
The following article was published in the Sarasota Herald-Tribune on March 5, 2012:
Amendment alters bill that bumps homeowners out of Citizens
By Lloyd Dunkelburger
Opponents of a bill that would move thousands of Citizens Property Insurance customers into unregulated, out-of-state insurers won a victory on Monday when the Senate narrowly backed an amendment that would require customers to “opt in” to the new coverage.
Sen. Garrett Richter, the main sponsor of the legislation, said the amendment undermines the intent of his bill to reduce the number of Florida residents covered by the state-backed Citizens corporation.
The bill (HB 245) would have allowed some of Citizens’ 1.5 million policyholders to be moved into surplus lines companies, whose rates are not regulated by the state and are not backed by a guarantee fund that supports regulated companies if they become insolvent.
Originally, the bill called for some Citizens customers to be moved into the surplus lines companies, with the chance to “opt out” of the coverage and stay with Citizens.
But Sen. Thad Altman, R-Viera, advanced an amendment flipping that scenario, providing that Citizens customers had to choose the move to the surplus lines companies and would be moved only after signing an agreement with their insurance agents.
Richter said the amendment largely negated his effort to reduce the size of Citizens, which critics say has grown too large and presents a financial threat to the state as well as other Florida insurance policyholders, who face assessments on their policies if Citizens can’t pay its bills after a major hurricane.
“This would absolutely reduce the bill to a screen door on a submarine,” Richter, R-Naples, said during the floor debate. “It will completely stop the takeout process, and Citizens will continue to grow and grow and grow.”
Altman argued that his amendment gave consumers more information about the potential changes in their homeowner coverage.
“They have a right to know who is insuring their homes,” Altman said. “The insurance that they have chosen should not be taken away from them against their will.”
Richter and other supporters of the bill said Citizens customers might be better off in the surplus lines companies because they will have to meet new financial standards in order to take over the policies.
The takeout companies have to have at least $50 million in surplus and have enough reserves and reinsurance to cover the possibility of two 1-in-100-year storms during a hurricane season. The bill also requires the companies to maintain at least an A-minus rating from the A.M. Best rating agency.
“The real question is how do we inform (Citizens policyholders) of the great peril they have in Citizens and that they really ought to get out of there if they can find a company to take them out of there,” said Sen. J.D. Alexander, R-Lake Wales.
Lawmakers’ expressions of concern about Citizens’ financial status came even as they have advanced other legislation to limit Citizens’ ability to levy assessments to help pay post-disaster claims. That legislation has been justified on the grounds that Citizens has $6 billion in cash reserves, a good credit rating and the ability to withstand a repeat of the record-setting 2004-05 hurricane seasons.
Altman said his amendment gives Citizens’ customers more of a voice in the takeout process.
“We owe it to them that they should have a say,” Altman said. “We should empower them, and I trust them to make the right decision.”
The amendment passed in a 21-18 vote.
Sen. Nancy Detert, R-Venice, was among those voting for the amendment, while Sen. Mike Bennett, R-Bradenton, voted against it.
The bill is expected to come up for a final vote today. It will move back to the House, where Richter says members do not support the amendment.
If the House removes the amendment, the bill will come back to the Senate for another vote before the session’s scheduled Friday end.
Senate President Mike Haridopolos, R-Merritt Island, who supports the bill, said his chamber might reconsider the issue then.
“Some people might change their minds in the next few days — you never know,” he said.
Find this raticle here: http://htpolitics.com/2012/03/05/amendment-alters-bill-that-bumps-homeowners-out-of-citizens/