Florida Senator files another bill to overhaul Citizens Property Insurance Corporation

Jan 11, 2012

The following article was published in The Florida Current on January 11, 2012:

Senator files another bill to overhaul Citizens

By Gray Rohrer

Governor Rick Scott and board members of Citizens Property Insurance are pushing for comprehensive changes to the state-backed insurer to reduce its size and coverage, and now they have a bill.

Sen. Alan Hays, R-Umatilla, this week filed SB 1784, which includes numerous reforms to phase out or limit Citizens’ coverage, but he admits the legislation is unlikely to pass this year.

“I filed it, but I don’t think it’ll go anywhere,” Hays said.

Hays filed an identical bill last year that did not get much traction, passing one committee in the Senate before coming to a halt. Senate President Mike Haridopolos, R-Merritt Island, has stated that his chamber “didn’t have a dance partner” on the issue last year, and there is not currently a companion bill in the House.

Lawmakers are dealing with the politically challenging tasks such as redistricting and filling a $2 billion budget shortfall in an election year, and Hays doubted the Legislature would be willing to take on comprehensive changes to Citizens that would increase homeowners’ premiums.

“But hey, if the attitude changes, we can tee it up and we’ll be ready to go,” Hays said.

The bill eliminates coverage for properties valued above $1 million starting in 2013, and phases out coverage of homes or condos valued at $500,000 or more by 2017. The cap on annual rate increases would be raised from 10 percent to 20 percent, and private insurers would be able to take out Citizens policies if they offer a rate within 25 percent of Citizens’ premium charge, as opposed to the current 10 percent requirement. Customers also could not use the aid of a public adjuster when filing a claim under the bill.

Scott and the Citizens board have said these changes and others included in the bill are necessary to reduce the amount of regular and emergency assessments that even non-Citizens customers would face if a catastrophic hurricane or series of storms wiped out Citizens’ ability to pay claims. A spokeswoman for Citizens said the bill allow sufficient time for the market to take on its policies.

”Citizens is seeing significant growth in the Personal Lines Account which would be impacted by the coverage reductions in Senator Hays’ bill.  While I cannot speak for what the private market will and will not be able to write, these statutory coverage reductions would be done over a number of years and not all at once,” Citizens spokeswoman Christine Ashburn said.

Meanwhile, consumer advocates are fighting SB 1784 and other bills, such as HB 245 and SB 578, which would allow out-of-state surplus lines carriers that are unregulated by the state to take over Citizens policies, provided they have a $50 million surplus.

“I believe that bill to allow the surplus lines carriers to participate in the Citizens take-out programs, that might have some traction,” said Sean Shaw, a former Insurance Consumer Advocate and the founder of Policyholders of Florida.

He added that his group is dedicated to putting pressure on lawmakers to protect consumers and keep prices for homeowners insurance down ahead of the 2012 election, lest the more comprehensive reforms be adopted in 2013.

“You’ve got to know what your person in Tallahassee is doing, because some of them, they get up and say things in Tallahassee they would never say in their home districts,” Shaw said.

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