The Florida Times Union
by Abel Harding
April 10, 2011
Property insurance reform is coming to Florida. Again.
Unlike the changes pushed through a willing GOP Legislature by then-Gov. Charlie Crist in 2007, these reforms are largely industry-friendly.
With differing versions working through the House and Senate, the end result remains unclear. Two things appear certain, however: taxpayer-backed Citizens Property Insurance, whose 1.3 million policyholders make it the state’s largest, appears poised to shrink dramatically and rates will rise — by at least 15 percent.
Industry experts say those changes are necessary to move Florida back to a free-market system, where insurance costs are based on risk. They argue that, in effect, taxpayers have subsidized construction in environmentally sensitive and high-risk coastal areas that private insurers are unwilling to cover. For the market to stabilize, if new construction can’t obtain coverage in the private market, there should be no assumption taxpayers will pick up the tab.
“It’s the heart of the issue,” said Don Brown, a former state representative and long-time insurance agent in DeFuniak Springs. “Until we reduce the exposure in the coastal areas, we’re never going to solve this problem.”
Because of the growth in Citizens, taxpayers are now on the hook should a natural disaster strike. The entity is drastically underfunded, and even policyholders with private carriers would see surcharges on premiums should Citizens fail.
For consumers, rate hikes appear inevitable, whether with a private carrier or with Citizens.
