Blog: Sweeping Property Insurance Package Headed to Full Senate

Apr 5, 2011

The following article was posted to the South Florida Sun Sentinel’s House Keys blog on April 5, 2011:

Sweeping Property Insurance Package Headed to Full Senate

By Julie Patel

A broad property insurance bill to allow insurers to drop full sinkhole coverage and create new restrictions for homeowners filing claims was approved today by the Senate’s rules committee and will now head to the full Senate.

Sen. Garrett Richter, R-Naples, who sponsored the bill, said it’s aimed to strengthen the property insurance market, attract insurers to Florida and reduce “rampant fraud.”

Lawmakers concerned about the impact of the bill, SB 408, on consumers removed key provisions of the bill in other committees. It was also watered down today through changes approved by the Senate’s rules committee. The changes approved include:

Changing the name of state-backed Citizens Property Insurance to Taxpayer Funded Property Insurance. Lawmakers need to have to some fun, said Sen. J.D. Alexander, R-Lake Wales, before proposing the change. Legislators said provisions of the bill are needed in part to help shrink Citizens’ costs because nearly all Floridians are on the hook to pay fees if Citizens has major deficits after hurricanes.

Requiring Citizens to offer full sinkhole coverage for the main structure of a policyholder’s property. The change addresses a concern some legislators expressed about people having nowhere to go if private insurers are no longer required to offer full sinkhole coverage, Richter said.

Eliminating a provision of the bill allowing insurers to raise rates if they’re losing money because of discounts they gave to policyholders who fortified their homes against hurricanes. Some insurers have already started revoking the discounts based on changes made last year by regulators. Sen. Chris Smith, D-Fort Lauderdale, who proposed repealing the provision, said regulators would still review the fairness of the discount.

The committee rejected Richter’s proposed change to make Citizens exempt from a so-called bad faith law that effectively allows policyholders who win lawsuits against the insurer to collect attorneys’ fees instead of subtracting the money from the claims payouts. Critics say Citizens delays or lowballs claims at times and should be subject to the same laws that hold private insurers accountable for good customer service.

“If it were proven that because of poor management or [arrogance] that Citizens had acted in a number of occasions in bad faith, I thin it would affect your job because we’d look” to find other managers, said Matt Gaetz, R-Fort Walton Beach. “Why do you think the government should treat people worse than private companies?”

Citizens Spokeswoman Christine Ashburn told legislators the insurer doesn’t have pressure to produce profits or dividends like private insures so it has no incentive to deny claims unfairly. “Whether or not we pay claims doesn’t change my salary or my president’s salary,” she said.

South Florida legislators said many of the homeowners in their areas don’t have an option for property insurance coverage other than Citizens.

“We can’t say there’s one set of rules for the private market and another” for Citizens, said Anitere Flores, R-Miami. “I just can’t put my constituents on an unlevel playing field.”

“I have never seen anything in the Florida Legislature that is as anti-consumer as this,” added Sen. Gwen Margolis, D-Miami.

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