Property insurance in Florida could soon see hefty changes. Republican lawmakers have recently proposed bills that would raise Citizens Property Insurance premiums by as much as 25 percent a year and could prevent many policyholders from receiving coverage.
The bills are designed with the intent to help shrink the state-funded Citizens and increase its claims-paying funds. This would be the biggest change to Citizens Insurance since 2009. That year, the 3-year freeze on Citizens’ rates was lifted, but annual increases for individual policyholders were capped at 10 percent.
There are several aspects of Citizens’ coverage that would change if the bills, known as SB 1714 and HB 1243, pass. First, they would allow an increase to policyholders’ premiums to the tune of 25 percent per year. This would not include, however, rates for sinkhole coverage or for private catastrophe backup coverage.
The bills would also make people who can find coverage from a private insurer that charges up to 25 percent more ineligible for a Citizens policy.
Next, the bills would require Citizens to drop policies that cover homes costing $500,000 or more to replace by 2016. Homes costing $750,000 or more to remake would mean a slightly longer deadline.
The bills would also prohibit Citizens policyholders from hiring public insurance adjusters to represent them in disputes over claims.
Finally, the bills would require Citizens to look to outsourcing for more of its work, similar to state-backed insurers in other states. This means that Citizen would have to hire a consultant to make recommendations on the costs and benefits of outsourcing, and then have its board submit a plan to the Cabinet for approval. Implementation of the plan would then have to begin by 2013. It is anticipated that outsourcing would be a way to help the insurer lower its overhead and compensation costs.
Citizens was formed in 2002 and is the state’s second-largest insurer with approximately 1.3 million policyholders, according to its website.
Source: SunSentinel.com, “Hefty rate hikes proposed for Citizens insurance policyholders,” Julie Patel, March 7, 2011.Share