Citizens Insurance changes criticized

Apr 9, 2008

Miami Herald--Apr. 09, 2008


A proposal to no longer let the state-run insurer write policies that cover only hurricane damage could lead to higher premiums and less coverage, according to agents around the state.

The provision is tucked into a massive insurance bill that contains a long list of changes for Citizens Property Insurance, including extending its current rate freeze through 2009. It was passed by the Senate General Government Appropriations Committee Tuesday.

Right now, many homeowners in South Florida and other coastal sections of the state have windstorm coverage provided by Citizens and buy fire, theft and liability coverage from a private carrier.

Citizens supports the idea because it would allow it to write the other, more lucrative coverage. Bringing additional premiums would help diversify Citizens’ risk.

Citizens, which is the largest insurer of homes in Florida, says it offers a standard policy that should be comparable to what private carriers offer. But agents say that’s not always the case.

”The proposal sounds good on the surface. But when you look at the price differentials and the coverages that could be eliminated,” it’s not a great deal, said Jeff Grady, president of the Florida Association of Insurance Agents.

Grady noted that Citizens policies don’t offer animal liability coverage and replacement cost coverage on contents at a high price. Also, homeowners could lose a discount on their auto policies if the same insurer doesn’t cover their cars and house.

There may also be no coverage for jewelry or art, said Dulce Suarez-Resnick, an agent with HBA Insurance in Miami.

But she said there are even bigger concerns for business owners because the commercial policy Citizens plans to start offering will provide only bare-bones coverage.

For instance, Citizens so far hasn’t included loss of income or coverage for other structures on a business property such as light posts or extended liability coverage.

The Senate committee also passed a bill that would reduce the exposure of the Florida Hurricane Catastrophe Fund by $3 billion.

Florida’s chief financial officer, Alex Sink, said eliminating the risk ”is the fiscally responsible thing to do.” She has been concerned about the additional risk the CAT Fund took on after it was expanded last year to provide more lower-cost back-up insurance for private carriers in Florida.

The downside of this bill is that it could lead to higher premiums in high hurricane-risk areas such as South Florida. That’s because there would be less cheap reinsurance available from the state to cover major losses after a catastrophic storm.

According to an analysis by the Office of Insurance Regulation, rates in Miami-Dade County could increase an average of 3.7 percent to 8.6 percent.

In Duval County, where Jacksonville is located, the increases could be less than 1 percent.