St. Augustine.com
Opinion
April 27, 2011
It’s time for the Florida Legislature to cut back the state’s Citizens Property Insurance Corp. to its original intent. It’s time for Citizens to become the state’s insurer of last resort for coastal homeowners and others who cannot get property insurance in the private market.
We doubt anyone in the Legislature in 2002 expected Citizens to compete with private companies. The goal was to pick up policyholders that private insurers could not or would not insure. But that’s not what we have now. What we have is a situation that if Citizens cannot cover all its claims, it can assess other property insurance customers. That means you and your neighbors.
Gov. Rick Scott promised in his January inaugural address, according to The Associated Press, to work with the Legislature “to eventually eliminate the government-run program’s reliance on assessments following a major disaster and ensure that Citizens consistently operates on actuarially sound rates.”
On Sunday, the Sarasota Herald-Tribune said Scott wants to eliminate Citizens in four years because it is overexposed and underfunded. The newspaper said the information came from documents about a meeting with Scott’s top staff and insurance lobbyists in February. That story caused concern as to where Citizens’ 1.3 million policyholders would go for future insurance.
But Monday, Locke Burt, president of Security First Insurance and a former state senator, said Scott only wants to curtail its growth, not eliminate it. Burt said he met with Scott in March.
In the past five years, state Rep. Bill Proctor, R-St. Augustine, has been saying Citizens needed to go back to what it was, the insurer of last resort. He supports eliminating the assessment on private policyholders to cover Citizens’ claims. Scott’s drum is louder because he is the governor. We hope the Legislature is listening.
The AP story quotes Scott’s spokesman Lane Wright on the issue. “With the position we’re in now, Florida taxpayers would be on the hook for a major storm or hurricane,” said Wright. “That’s not acceptable.”
We agree. The Legislature should begin a phase-out of assessment requirements.
The Legislature is looking at ways to curtail Citizens’ growth. One way, according to the AP story, is to ban Citizens from writing policies on new construction or remodeling of existing homes in environmentally sensitive and high-risk coastal areas. Another is to raise its rates and let the competition with the private sector work that out. That’s good but not enough.
If there is a four-year time period established for reducing Citizens’ policyholders, that should give current Citizens policyholders time to find a new insurer and for new private companies to enter the high-risk market.
Citizens won’t go away because there will always be properties that private companies will not insure. The Legislature should encourage private companies in the high-risk market as there are an estimated 1.3 million policyholders of Citizens today. It’s unfortunate that Citizens’ high-risk policyholders might have to go to the surplus insurance market with its unchecked rates and no state guarantee. But the property owners choose to buy in the high-risk areas. We don’t make that choice and we shouldn’t be expected to pay for their repairs either.
http://staugustine.com/opinions/2011-04-26/our-view-get-citizens-assessment-our-backs
