Amid report that Scott tried to kill Citizens Insurance, Senator Fasano asks delay on rate hike bill
Apr 25, 2011
The following article was published in the St. Petersburg Times on April 25, 2011:
Amid report that Scott tried to kill Citizens Insurance, Fasano asks delay on rate hike bill
By Janet Zink
Saying he wants to hear from Gov. Rick Scott’s office and industry lobbyists, a state senator is trying to delay a committee vote today on a bill that would dramatically increase state-run Citizens Property Insurance Corp. rates while dropping some customers.
In an e-mail Sunday to Senate President Mike Haridopolos, Sen. Mike Fasano said the bill needs more public vetting.
“There needs to be a full hearing requiring testimony from both the insurance industry lobbyists and Scott’s staff,” said Fasano, a New Port Richey Republican. “Senate members and the consumers have the right to ask questions before any further votes are taken.”
His request comes in the wake of a news article Sunday revealing that Scott pushed to eliminate Citizens within four years.
The Sarasota Herald-Tribune reported that in a February meeting with industry lobbyists, Scott’s staff sought to force Citizen customers back into the private market — making many property owners turn to the surplus lines market, where rates are unchecked and policies are not backed by a state guarantee.
Citizens serves 1.3 million Floridians, with more than half of those policyholders in Miami-Dade, Broward, Palm Beach and Pinellas counties.
As of late Sunday, Fasano said he had not heard from Haridopolos about his request.
The committee set to the hear the bill is chaired by Sen. J.D. Alexander, who also launched an initiative to change the name of Citizens to “Taxpayer-Funded Property Insurance Corporation.” That measure is included in a massive property insurance bill, SB408, that’s on the Senate’s Wednesday session calendar.
Alexander suggested the name change as a way to “appropriately note the source of its capital.”
About 72 percent of Citizens’ revenue in 2009 came from assessments paid by Floridians through their property, automobile and other types of insurance. The money covers losses incurred during the many hurricanes that hit the state in the past decade. Its policyholder premiums account for only 21 percent of its revenue.
The bill Fasano wants yanked from today’s hearing, SB1714, would allow Citizens to raise rates by up to 25 percent, loosening the 10 percent annual cap on premium increases.
The goal: Make Citizens better able to handle potential losses in case of a severe storm without passing the cost on to taxpayers.
The proposal also would make Citizens less competitive with private insurers.
The bill on the agenda for today is sponsored by Sen. Alan Hays, a Republican from the central Florida city of Umatilla.
Hays has said his ultimate goal is to shrink Citizens to nothing.
“The state of Florida has no business being in the property insurance business, period,” he said at a March news conference when he stood with tea party activists and environmental groups to announce his bill would also prohibit writing new residential policies on Florida’s coastlines and phase out covering certain homes worth more than $500,000.
But the bill would shrink Citizens only by about 4,957 policyholders, a company spokeswoman said. Another Senate bill could actually increase its size.
SB408, sponsored by Sen. Garrett Richter, R-Naples, would force Citizens to take on all the comprehensive sinkhole policies likely to be dropped by private insurers if the bill passes, because it frees private companies from having to offer such coverage.
Insurers have complained that the sinkhole policies are a drain on their coffers. Nearly 6,700 sinkhole claims were filed in 2010, costing the industry nearly $400 million, according a survey conducted by the state Office of Insurance Regulation.
As originally written, SB408 did not require Citizens to keep offering the coverage. But the requirement was added amid concerns that property owners whose banks require them to carry sinkhole coverage wouldn’t be able to get a private insurer to sell it to them if they no longer had to.