Insurance fight joins again as senators clash over surplus lines bill
Dec 7, 2011
The following article was published in The Florida Current on December 7, 2011:
Insurance fight joins again as senators clash over surplus lines bill
By Gray Rohrer
A bill encouraging surplus lines property insurance companies to take over policies from state-backed Citizens Property Insurance Corp. was voted out of the Senate Banking and Insurance Committee on Wednesday, but not before two lawmakers sparred over the legislation.
Sen. Mike Fasano, R-New Port Richey, was able to place an amendment on SB 578, over the objections of Sen. Garrett Richter, R-Naples, the bill’s sponsor. The amendment requires that Citizens customers be given an outline of the differences between the new policy and the current policy before they sign up.
Richter wants to allow out-of-state surplus lines carriers to be able to take on Citizens’ policies to reduce its 1.5 million policies in the state. If a large storm hit the state, it could wipe out Citizens’ ability to pay claims and force emergency assessments on all property owners including non-Citizens customers. To reduce that risk, Richter wants to provide other options for homeowners who can only get affordable offers from the state-run Citizens.
The surplus lines companies, however, are not subject to regulation by the state, and although the bill requires them to have $50 million in capital in order to participate in the program, it does not contain the protection of the Florida Insurance Guarantee Association, which pays out the claims of insolvent insurance companies.
For Fasano, bringing in unregulated companies into the state is not the way to reduce the number of Citizens policies. Even though the bill does not require customers to move out of Citizens, he’s wary of future legislation that will push them out.
“I believe this is just a preamble. This is the beginning of forcing people out of Citizens. I believe it’ll be just a choice today, but a mandate tomorrow,” Fasano said in a telephone interview.
Richter thinks there are enough protections for Citizens customers in the bill already, but stressed that the largest property insurer in the state needs to reduce its risk.
“Senator [Fasano], the intent of the bill is to return Citizens to the insurer of last resort. The only way you can do that is to do a managed depopulation program,” Richter said.
The fight is a rematch, of sorts, from earlier this year, when Fasano tried to run several amendments on Richter’s SB 408, which passed on the Senate floor after narrow committee votes.
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