The Florida Senate Banking and Insurance Committee has been busy lately. A bill that lawmakers hope will send Floridians away from Citizens Property Insurance Corp. made it out of committee on a 6-4 vote this week. If enacted, the proposed law would raise premiums and limit the types of coverage the state-run insurer could offer.
The vote didn’t come easily. Public testimony from some of Citizens’ 1.3 million policyholders kept the meeting lively as the lawmakers debated the proposed 25 percent rate hike. Cries of “Socialism failed in Moscow!” were countered with pleas that the state not abandon the homeowners that the private insurance industry has left at the curb.
Proponents say the increase in rates is necessary to keep the insurance company afloat. Since the beginning of 2010, annual rate hikes have been limited to a 10 percent statewide average. The immense growth in the number of insureds has put the company in financial straits — premium dollars aren’t covering risk, an actuarially unsound model. Citizens is funded by assessments on Florida residents.
Critics say the rate hike would put even Citizens coverage out of reach of coastal homeowners. Private insurers haven’t covered those areas for some time.
While the proposed rate hike could reach 25 percent for some insureds, the statewide average wouldn’t exceed 20 percent. But it doesn’t stop there: Starting on January 1, 2012 Citizens would not cover homes valued at more than $1 million; by January 2016, only homes valued $500,000 or less would be covered.
Also under the proposal, Citizens would not insure commercial, non-residential properties (less than 1 percent of policies now in force). Sinkhole coverage would only be available for primary residences, not ancillary buildings. And, Citizens policyholders would be asked to pay a 15 percent surcharge on renewal, termination or cancellation before other insurers could levy assessments on non-Citizens policies.
The companion bill in the House of Representatives was approved by the Insurance and Banking Subcommittee of the Economic Affairs Committee.
Source: Miami Herald, “Citizens’ bill to raise premiums clears first hurdle in Senate,” Michael Peltier, 03/30/11Share