When Florida Governor Rick Scott threw down the gauntlet a couple of weeks ago, he expected the board of Citizens Property Insurance Company to come back with strategies that would help the company trim its budget and grow its reserve. The state-backed insurer may have taken the governor and the Legislature by surprise when it came back earlier than expected with requests for legislative action.
Citizens wants lawmakers to take up many proposals that never made it out of committee during the last session. The company asks to have the 10 percent cap on rate hikes removed; the board suggests, too, that the eligibility threshold be increased from 15 percent to 25 percent. These and other changes to the law would ensure the company could meet the governor’s challenge; these changes are the company’s best hope for building a reserve that could handle a big storm.
Even proponents of the plan say it will be a hard sell in the 2012 political climate. Both state and national elections will likely be contentious, and party politics may move the company’s solvency to one of many back burners.
Critics, though, say that the changes won’t have the desired effect. The problem, according to one state senator, is the insurance market: Citizens cannot shed policyholders because private insurers simply won’t cover residents in places like Tampa, where sinkhole claims have been common.
Private insurance companies have been leaving Florida in droves, particularly after the 2005 hurricane season. The sinkhole coverage “crisis” has stalled any plans they may have had to re-enter the market here.
There is data, though, that shows that private companies are writing more policies in Florida. The high-risk areas like Tampa and South Florida may always have fewer options, but, if private insurers continue to increase market share in the rest of the state, perhaps Citizens will have a chance to shrink.
At the moment, though, no one is making any predictions.
Source: PropertyCasualty360.com, “Florida Last-Resort Insurer Takes List of Changes to Lawmakers,” Gary Fineout (AP), Nov. 15, 201Share