The St. Augustine Record
by Michael Peltier
March 12, 2011
TALLAHASSEE — The state-run insurer of last resort would not cover newly constructed homes in the state’s most hurricane-prone areas under a provision to be introduced next week and backed by a oddly diverse coalition of interests who usually don’t agree.
Sen. Alan Hays, R-Umatilla, said Friday that will propose to prevent Citizens Property Insurance Corp., from offering new policies in coastal and high risk areas of the state.
The provision, which Hays plans to offer as an amendment to another insurance measure he’s sponsoring, would also prohibit the state-backed insurer after June 1, 2012 from providing coverage to owners who remodel existing homes if the fix up increases the value of their home by 50 percent or more.
The provisions would not drop coverage for the 400,000 Citizens policyholders who currently are in the company’s high risk pool for wind or multi-peril coverage.
The underlying bill, makes changes that would reduce the number of coastal residents insured by the state-run pool. Citizens has seen its ranks swell in the past several years as private companies like Allstate, Nationwide and others bail out or dramatically reduce their books of business across the state. Now, with 1.2 million policyholders, Citizens is the largest property insurer in state.
Joining Hays in supporting the proposal are environmentalists, who support slower growth along the coasts.
Hays and other conservatives are pushing the idea because of their opposition to the state taking such a large role in the insurance business, and the peril in which it puts the taxpayers in the event of a large loss for Citizens.
“My goal is to depopulate Citizens, to make it as small as we can make it as rapidly as we can,” Hays said.
Citizens has $400 billion in exposure in coastal regions but has only $4.5 billion in reserves. In the event of a catastrophic storm, Citizens would pay its claims by assessing all property and automobile insurance policyholders, a scenario critics say is patently unfair.
“The Citizens Property Insurance Corp. is a threat to Florida’s fiscal well-being, it’s a threat to residents’ safety and it is a threat to the environment,” said Eli Lehrer of the Heartland Institute, a fiscally conservative organization that wants the state out of the insurance business.
On Friday, Hays was joined at a news conference by representatives of the Florida Wildlife Federation, 1,000 Friends of Florida, the Sea Turtle Conservancy. They stood side by side with representatives of fiscally conservative organizations like Heartland, the James Madison Institute, Americans for Prosperity and the Tallahassee Tea Party that support the measure.
“Some of these areas are some of our state’s most valuable coastal habitats,” said Manley Fuller of Florida Wildlife Federation “We think this bill is a place … where conservation and good economic sense come together.”
Hays plans to add the provision to SB 1714, filed earlier this week, that allows Citizens to increase residential policyholders’ rates by 25 percent on any single policy, excluding coverage changes and surcharges, and restricts who could purchase insurance from the state-backed insurer.
The proposal makes a number of changes to Citizens, including a phase out of Citizens coverage for the most expensive homes, with the state-run insurer by 2016 only covering homes worth less than $500,000. It also would prohibit Citizens policyholders from using public adjusters to file claims.
Officials at Citizens didn’t return a call for comment Friday.
Jack McDermott, spokesman at the Office of Insurance Regulation, said the office supports the underlying bill, but couldn’t comment yet on the proposed amendment.
http://staugustine.com/news/local-news/2011-03-11/bill-would-trim-citizens-beach-coverage
