Florida Governor Rick Scott Signs Citizens Property Insurance Reform Bill (CS/SB 1770)
May 29, 2013
CS/SB 1770, which provides for various reforms of Florida’s Citizens Property Insurance Corporation (“Citizens”), was signed into law by Florida Governor Rick Scott today, May 29, 2013.
Effective July 1, 2013 unless otherwise provided, CS/SB 1770 is also known as the “clearinghouse” bill, because it creates the statutory authority for Citizens to establish a clearinghouse to determine the eligibility of new and renewal risks that are seeking Citizens coverage.
A news release on today’s bill signing from the Office of Florida Governor Rick Scott is below.
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TALLAHASSEE, FL – Today, Governor Rick Scott signed SB 1770 into law, which reforms the state’s largest insurance company, Citizens Property Insurance Corporation, a taxpayer backed entity.
Governor Scott said, “This legislation will bring much needed reforms to better protect the taxpayers who support Citizens Property Insurance. This legislation requires Citizens to have an Inspector General that they cannot fire, follow state purchasing guidelines, and disclose potential surcharges with each policy renewal notice. It also requires Citizens to implement a clearinghouse to ensure Floridians no longer subsidize those with private insurance options. Additionally, this law helps protect the environment by removing subsidies for new construction in environmentally sensitive coastal areas.
“With this legislation now in place, I am asking Chief Inspector General Melinda Miguel to immediately join with other Cabinet offices and begin a nationwide search for the new Citizens Inspector General. This new Inspector General will be accountable to the Cabinet and will not be an entity Citizens can fire, as they did with their old compliance officers. A strong Inspector General is needed to provide independent oversight at Citizens and to end the fraud, waste, and abuse which has plagued Citizens for too long.
“I have previously requested and reviewed Inspector General Reports on the egregious travel expenses at Citizens and the termination of their compliance office. The IG reports confirmed what most of us already knew – Citizens needs serious reform in order to instill the public confidence that should belong to the state’s largest insurance company, which is supported by Florida taxpayers.
“We called for Citizens to make immediate changes to their travel guidelines to bring them in line with official state travel restrictions, which do not reimburse for the purchase of alcohol. We called on them to further change their travel policy so it prohibited any international travel and permitted only essential employees to attend board meetings. We called on them to give back the outrageous pay raises they doled out to their executives last year. And, we called for the creation of an independent statutory IG to enforce existing rules at Citizens and force them to make additional reforms, which this legislation will finally begin today. Disappointingly, Citizens has still not returned the lavish pay raises it doled out to its executives last year.
“With this legislation, Citizens will now have to follow state guidelines for purchasing commodities. Because they oversee millions of dollars in contracts, this reform is long overdue. State purchasing guidelines will help ensure a high level of transparency and competition.
“Senate Bill 1770 also prohibits new construction commencing after July 1, 2014 from Citizens coverage if it is built in high-risk, environmentally sensitive coastal areas. This commonsense step eliminates public insurance subsidies for new coastal constructions with a high risk of storm losses. This reform also has the added benefit of protecting environmentally sensitive areas from further development.
“Finally, in light of the risk transfer agreement Citizens executed last week with only four days public notice, the company should further reform their existing policies to require a minimum seven days notification of a public meeting. This commonsense reform would bring Citizens’ policies in line with the state’s Administrative Procedures Act, which directs agencies to publish their agenda at least seven days in advance. This is another area where Citizens should come in line with existing state policies and not be given special treatment.
“I am grateful for the leadership of Senators Simmons and Richter, Representatives Holder and Nelson, and the Legislature for their work on SB 1770. While this law will not be a cure-all for Citizens’ many problems, it makes important reforms to improve this taxpayer backed organization.”