Lawmakers contemplate a Floridians-only Citizens Property Insurance Corporation
Feb 24, 2013
The following article was published in the South Florida Sun Sentinel on February 24, 2013:
By Maria Mallory White
As lawmakers continue to grapple with how to slash Citizens Property Insurance Corp.‘s list of 1.3 million policyholders and the massive risk it represents, one group has emerged as a potential target: non-Floridians.
According to figures from its database, 360,000 Citizens policies are issued for non-owner-occupied homes in the state. Among those, some 192,000 are sent out of state to places such as Canada, New York and New Jersey.
“Are these individuals who should be purchasing insurance from the private market, particularly while it’s available, rather than buying it at Citizens,” Senate Banking and Insurance Chair David Simmons, R-Altamonte Springs, asked Thursday as his committee discussed a massive draft bill to revamp Citizens.
According to company data, Citizens mails 20,188 bills to Canada, 24,908 to New York state and 11,165 to New Jersey. And while address alone isn’t a definitive way to determine a policyholder’s full-time residency status, “It is the best tool we have with the data we collect today,” said Christine Ashburn, director of communications, legislative and external affairs at Citizens.
So, the question remains: Should the Legislature end out-of-staters’ access to taxpayer-backed Citizens coverage for their vacation homes, particularly in high-risk coastal areas where Citizens’ policies are generally priced below market rates?
Some, such as researchers from the American Consumer Institute (ACI) Center for Citizens Research, argue the state should force non-Floridians out of Citizens so that they would then pay market rates.
This month, ACI released “Welfare for the Rich: How Citizens Insurance Corporation Harms Floridians.” Citizens’ market-discounted rates benefit out-of-state homeowners at the expense of Floridians, who, in effect, are subsidizing the coastal insurance of foreign homeowners, 82 percent of whom pay cash to buy their vacation homes, the report said.
This happens, explained Steve Pociask, co-author of the report, because the state doesn’t require any sort of formal needs testing before policies are written by Citizens.
“The whole idea of putting out a safeguard to protect primary homeowners and renters, I understand,” said Pociask, who has been in contact with the Senate committee’s staff to analyze the problems at Citizens. “These are the teachers, service workers and others who work in your communty.”
Cash-flush investors are a different story. “Foreign and out-of-state buyers are much more able to afford paying an actuarially sound insurance rate,” Pociask said.
Making Citizens write policies for Floridians only could hurt the state, said Citizens Chairman Carlos A. Lacasa. Such a move, he said, could discourage foreign and out-of-state investment in Florida’s housing market.
“If they own property here, but they don’t live here, what does that mean: They don’t have kids in our public schools. They are not contributing to the congestion on the roads. They pay property taxes,”, said Lacasa, comparing the way vacation-homeowner cash flows into the local economy without adding full time to services that draw from it.
“I love those people buying in the state, I love those people investing in Florida, and I love those people visiting us from time to time,” he said.
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Non-Floridians in Citizens
Among the 192,000 out-of-state policies written by Citizens Property Insurance Corp., here’s a listing of the top five U.S. and overseas locations where the bills are sent:
United Kingdom 1,024
Puerto Rico 76