Citizens slows push for uncapped rates on new policies
Florida’s mammoth state-run insurance company decided Thursday to move more slowly on a plan to allow unlimited rates for new clients.
Part of an aggressive push by Citizens Property Insurance to reduce its number of policies by more than 400,000 (or about 30%) in the next 18 months, the plan would remove the 10 percent cap on rates for any new customers, causing them to pay as much as 50 percent more than existing customers with similar policies.
After a wave of outcry from the public and lawmakers, the board of governors decided to ask Citizens’ staff to study the issue further before bringing it up for a vote.
Sen. Mike Fasano, R-New Port Richey, made a rare appearance at the meeting to urge board members to reject the plan, stating that it was not in line with lawmakers’ intent when they passed the 10 percent cap on rates in 2009.
“It was decided by the Legislature, signed into law by the Governor,” he said. “Now you’re suggesting that the law that was passed doesn’t take into account new business. I would suggest to you that your staff is wrong.”
Fasano held a leadership position in the Senate when the law was passed, as did Chief Financial Officer Jeff Atwater, who sent a letter to Board Chairman Carlos Lacasa urging the board to think carefully about what they were about to do.
"As the President of the Senate during the debate and deliberation of the cap, it was not contemplated that the statute would be interpreted to employ selective application that would result in two sets of rates being applied to the policyholders of Citizens," Atwater wrote.
A lawyer for Citizens claimed that the rate cap that was passed into law applied only to existing policies, since it addressed “rate increases.”
“A new premium for a new policy is not a rate increase, it is a new rate,” he said.
Sean Shaw, president of Policyholders of Florida, said he was not surprised that Citizens decided to move more slowly after a wave of backlash. He compared it to the organization’s 2011 plan to raise sinkhole rates by more than 400 percent, which led to similar outcry and a scaled back plan.
“I don’t understand why Citizens doesn’t take into account these things before they decide to issue decisions,” he said.
In November, Gov. Rick Scott asked Citizens to consider options for reducing its size and risk that would not require legislative approval, as most major changes to Citizens have in the past.
Citizen new interim president, Tom Grady, said he supports Citizens' overall efforts to reduce its exposure.
“Citizens need to shrink,” he said. “I personally don’t think that we have an orderly market.”