Orlando Business Journal
by Bill Orben
April 11, 2011
I decided today to listen in on a conference call with the Florida Association of Insurance Agents to find out what’s the latest with the Legislature’s efforts to reform Citizens Property Insurance Corp.
The gist of what was said is this: The state is working to make people who decided to buy property in hurricane-prone areas, such as along the coast, pay more of their fair share to insure it. After all, it was their decision to have a home there.
And really rich people who own really expensive homes won’t be able to get uber-cheap coverage at the taxpayers’ expense anymore. If your homeowners insurance increased by more than 10 percent — the cap on Citizens Property Insurance Corp. rates — that’s something you’ll likely appreciate.
Citizens Property Insurance Corp. policyholders would pay 15 percent to 25 percent more for insurance next year under proposed state laws aimed at reforming the state-run insurer.
In addition, Citizens could cover only properties valued at $1 million or less starting next year. By 2016, Citizens would insure only properties valued at $500,000 or less.
It’s a bitter pill for Citizens’ 1.3 million policyholders, but it’s also one they likely will swallow.
House Bill 1243 allows for a 15 percent increase and Senate Bill 1714 would increase rates by 20 percent to 25 percent. The House and Senate are expected to pass the two bills, with a compromise rate increase likely will be 15 percent to 20 percent. And Gov. Rick Scott is expected to sign the compromise bill into law.
The aim of the two bills is to return Citizens to being the state’s insurer of last resort, enable it to charge enough premiums to actually cover claims and end its competition with other insurers.
Because of its lower premiums, Citizens has become the largest property insurer in Florida and one of the 50 largest in the nation. Right now, if Citizens can’t cover its claims, the state simply would levy an assessment on other property and vehicle insurance policies to make up the difference.
Of the 1.3 million insured by Citizens, 70,000 in the last year got quotes from other insurers but signed on with Citizens because it was cheaper, said Sen. Alan Hays, R-Umatilla, who introduced the bill in the Senate and is stumping for its passage.
The 500 most expensive homes covered by Citizens — valued from $3.5 million to $26 million — represent $2.6 billion in exposure to state taxpayers, Hays said.
“We have to stop this,” said Hays during the insurance group’s conference call, speaking of the risk faced by Citizens.
The backlash from proposed Citizens’ rate increases and lowering the values of properties eligible for coverage likely will be fierce. However, those howls of discontent pale in comparison to the screams of taxpayers angry about covering the potential losses of Citizens’ policy holders.
http://www.bizjournals.com/orlando/blog/2011/04/will-florida-voters-swallow-this.html
