Citizens rate lock advances

Mar 26, 2008

Palm Beach Post–Mar. 26, 2008
Palm Beach Post Staff Writers

TALLAHASSEE — Windstorm premiums would be capped for another year for homeowners with state-backed insurance, but Floridians covered by private carriers could see a rate hike under a pair of bills a state Senate committee approved Tuesday.

The apparent conflict was a result of the "tightrope" lawmakers are walking to stabilize the state’s property insurance market, said Sen. Jeff Atwater, R-North Palm Beach.

"That’s the tension," Atwater said. "These are part of the walk to that place that is going to be a more sound, competitive, and I believe, more consumer-friendly environment."

Atwater is leading a charge in the Senate this year to keep insurance costs down by loosening restraints on Citizens Property Insurance Corp. and putting tighter restrictions on insurance companies.

But others, such as Democratic Chief Financial Officer Alex Sink and Republican House Speaker Marco Rubio, have sounded the alarm over the increased risk the state assumed last year in return for lower premiums and are pushing to return some of that potential debt to the private market.

Atwater, whose coastal district is peppered with Citizens policyholders, included the rate freeze in his bill (SB 2860). If the bill receives final approval, which it needs from both houses of the legislature, it would mean a cap on Citizens premiums for the third year in a row.

The Senate Banking Insurance Committee approved the bill 6-2, but lawmakers were divided on several issues, including whether to let million-dollar homes remain under the cap.

"This is like the reverse of Robin Hood," said Sen. Al Lawson, D-Tallahassee. "You should not ask people in North Florida and other people that are on regular income to subsidize million-dollar homes built on the coast … almost in the water."

The same Senate panel later unanimously approved a proposal from Sink to reduce the state’s Hurricane Catastrophe Fund, which is reinsurance the state sells to insurance companies.

The change (SB 2156) would cut the state’s payouts after a disastrous storm but also could lead to an average statewide premium increase of 2 percent this year.

In Palm Beach County, rates could rise between 3 percent and 7 percent, said Tom Zutell, spokesman for the state Insurance Regulation Office.

Rubio said, "It’s a difficult balancing act."

Rubio, R-West Miami, said Tuesday that he supports the rate freeze for Citizens.

"The last thing people getting higher tax bills, higher gasoline bills, higher electric bills need is another high insurance bill," Rubio said.

Rubio also has endorsed Sink’s proposal, which a top House committee approved unanimously last month.

Sink, who visited the Senate committee Tuesday to drum up support for the measure, acknowledged the chance for premium increases. She issued a warning for reinsurers from the podium in the committee room.

"If the reinsurance industry takes advantage of this move for us to lay off our risk, you’re going to have me to deal with," Sink said. "And trust me, you do not want me to deal with."

Atwater’s bill, which also includes several new regulations and an increase in fines for insurers that break the state insurance code, has the support of state Insurance Commissioner Kevin McCarty but widespread flak from the industry.

Sam Miller, head of the Florida Insurance Council, criticized a provision that exempts insurers from some lawsuits, such as claims of unfair rates.

"It’s very unfortunate and very counterproductive," Miller said. "Why are we doing this? To help the trial lawyers?"