Crist extends freeze on Citizens’ rates
May 29, 2008
Miami Herald--May 29, 2008
BY BEATRICE E. GARCIA
Gov. Charlie Crist signed an extensive insurance bill that enchances protections for homeowners and freezes rates for Citizens Property Insurance, the state-run insurer for one more year.
He vetoed a provision in the bill for a capital build-up program that would have provided low-interest loans to start-up insurance companies to help increase their reserves so they could write more policies. The $250 million for the program would have come from reserves accumulated by Citizens.
That idea wasn’t widely supported, especially since Citizens would need that money to pay claims if a massive storm hits this year.
‘[The governor’s] action today ensures that Citizens’ surplus will only be used for its intended purpose — to pay the claims of our policyholders,” said Scott Wallace, Citizens’ president and executive director.
Crist noted the initial capital surplus program, created in 2006 and funded with $250 million from the state’s general revenues, has been successful in having some 200,000 policies taken out of Citizens and another 480,000 new policies written by 13 companies that received the surplus loans.
But given Citizens’s $223 billion exposure, taking money from its surplus ”will substantially increase the likelihood of assessments for all Floridians,” Crist said.
The insurance bill, passed by the state Legislature earlier this month, increases penalties for insurers who don’t break the state’s insurance code. Rate requests must be approved first by regulators before companies can implement them.
A key provision of the bill requires insurance companies to pay the undisputed portion of claims within 90 days, otherwise homeowners can sue their insurers for bad faith.