Florida Agent Group Backs Last-Resort Insurance Reform
Apr 12, 2011
The following article was posted to PropertyCasualty360º on April 12, 2011:
Florida Agent Group Backs Last-Resort Insurer Reform
By Chad Hemenway
Florida’s insurance agents are among those within the industry looking to lawmakers to reform the insurance market in the Sunshine State during this year’s legislative session.
The Florida Association of Insurance Agents (FAIA) on Monday held a press conference to specifically support two measures, including SB 1714, which would return the state-run Citizens Property Insurance Association to last-resort status.
“I am compelled to make sure everyone in Florida knows the whole truth about the fact that Citizens is underfunded by at least $10.5 billion,” alleges bill sponsor Sen. Alan Hays (R-Umatilla). “If the big hurricane hits, many [Citizens’] policyholders are not going to get money for repairs, and all Floridians will be taxed to make up that shortfall.”
SB 1714 and its House companion bill 1243 would allow Citizens to increase rates up to 20 percent per policyholder and would reduce eligibility from homes valued at $1 million to homes valued at $750,000 starting Jan. 1, 2014.
The measure follows a bill signed into law a year ago that allowed the state-run insurer to increase rates 10 percent.
Currently homeowners are permitted to turn to Citizens if rates they receive in the private market are 15 percent higher than the rates at Citizens—which was easier to accomplish as Citizens’s rates were frozen.
The proposed legislation would raise the rate-differential eligibility standard to 25 percent.
The FAIA says legislation aimed at making Citizens a true last-resort insurer is paramount.
“What good is reforming private insurance if private insurers can’t write any new business?” asks Kyle Ulrich, senior vice president of public affairs for FAIA.
Legislation enacted at the start of 2007 froze Citizens’s rates for three years, making it easier to get a policy with the insurer. Therefore, Citizens grew rapidly to become the state’s largest property insurance writer. In the meantime, the rates Citizens charged fell far below what is considered actuarially sound.
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