Citizens Property Insurance attempts to shrink, Governor Rick Scott applauds
Jan 18, 2012
The following article was published in The Florida Current on January 18, 2012:
Citizens attempts to shrink, Governor Scott applauds
By Gray Rohrer
Private insurance companies will take over 17,000 policies from the state-backed Citizens Property Insurance Corp. next month, Citizens CEO Scott Wallace told Florida Cabinet members Wednesday.
The policies are a fraction of the 1.47 million backed by Citizens that make it the largest property insurer in the state. Gov. Rick Scott and many lawmakers want to reduce the size of Citizens, originally conceived as a last resort for homeowners who could not find affordable insurance, and to attract more private companies to the state.
Wallace said Citizens has begun implementing operational changes approved by its board of governors this past month. Citizens will no longer cover coastal account properties valued at $1 million or more, now requires 10 percent sinkhole deductible, and reduced its maximum personal liability coverage from $300,000 to $100,000.
Although Florida has not been hit by a major hurricane for six straight years, Wallace said private carriers still are skittish about coming into the state because of the power of the Office of Insurance of Regulation to set rates and the competition of Citizens’ lower rates. He acknowledged, however, that regulators contend with a “unique” market in Florida.
“We are a very unique state. We stick out in the Atlantic Ocean like a big sore thumb,” said Wallace, who is retiring in April.
“That’s why we all live here,” Scott replied during the Cabinet meeting.
At a press conference later, Scott explained that although he wants to keep the cost of home insurance low, homeowners should pay the full cost of coverage, rather than continue the current system of relying on assessments after a storm, which he says could push people out of their homes.
“The first thing I think about is, I have a house on the beach. I don’t believe anybody should subsidize my property insurance, I made the decision to do that,” Scott said. “I’m very worried about, do people have the $1,200, especially after a disaster, and what happens afterwards? Their policy gets cancelled and their mortgage gets cancelled.”
In addition to the new management directives, Citizens also is pushing legislation aimed at taking out its policies, reducing its risk exposure and moving more business into the private market: SB 1384, HB 1127, SB 1346, HB 245 and SB 578.
But Citizens is also concerned about HB 833, filed by Rep. Bill Hager, R-Boca Raton, which would reduce the size of the Cat Fund, the state’s reinsurance fund. Citizens board members last month approved a letter be drafted criticizing the bill. Proponents of the bill, including Cat Fund COO Jack Nicholson, who suggested many of its provisions, say the legislation is needed to avoid a potential $3.2 billion shortfall in the wake of a catastrophic storm.
Find this article here: http://www.thefloridacurrent.com/article.cfm?id=26200521