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Florida property insurance changes pass Senate committee

TALLAHASSEE — A bill brimming with enticements for the private property insurance industry — while forcing homeowners to pay higher rates to reinvigorate a tepid market — passed its first committee in the Florida Legislature on Thursday.

The proposal, SPB 7018, is a massive insurance reform effort that targets state-run Citizens Property Insurance Corp., but also includes costly side effects for homeowners with private insurers.

Sen. David Simmons, R-Altamonte Springs, who chairs the Banking and Insurance Committee and is backing the bill, said it went a long way toward reducing Florida's exposure and shrinking government-run insurance.

"No longer will Citizens be undercutting private insurers in the state of Florida," he said.

Consumer advocates — who say the bill will certainly hike rates on Florida's homeowners — complained that the committee took only a few minutes of public comment before voting on the massive bill.

Bill Newton, executive director of Tampa's Florida Consumer Action Network, said he was "appalled" by the most anticonsumer process he's seen in many years of lobbying in Tallahassee.

"If we were getting heard that would be one thing," he said. "But you don't even get a chance to talk. Hardly anybody did."

Several proposals within the bill allow insurance companies to jack up rates higher and faster, while giving them access to Citizens' $6 billion cash surplus and the company's most lucrative policyholders, who would be kicked out of state-run insurance.

The bill passed 11-1, with Sen. Jeff Clemens, D-Lake Worth, opposing the measure.

The vote showed rare agreement on what has been a contentious issue in the past. Insurance reform proposals are politically difficult in the Florida Legislature, where Democrats and coastal Republicans have joined together in recent years to kill proposals that would raise insurance rates on vocal voters.

Times staff writer Jeff Harrington contributed to this report.

.Fast facts

Proposals that could raise Citizens' rates

The following proposals in the 78-page bill could hit homeowners' pocketbooks when they renew their insurance policies in 2013 and 2014:

Citizens rates "must be actuarially sound, include an appropriate risk load factor and not compete with the private market." Each of those three measures could translate into higher rates for Citizens' customers, who are currently protected by a 10 percent cap on rate increases.

Insurance companies may charge higher rates to cover additional reinsurance purchased for a potential catastrophic hurricane. For Citizens' customers, this could mean an additional 3 percent rate hike (about $65 extra per year), in exchange for the promise of a slightly smaller post-storm "assessment" if a major hurricane occurred.

Rates for certain homes valued above $300,000, second homes and new policyholders at Citizens must be higher than the rate charged by the top 20 private insurance companies, leading to large premium hikes for thousands of homeowners.

Citizens can loan some of its $6 billion surplus to private companies who agree to take over some of its policies, a move that would leave the insurer with fewer resources in the case of a major hurricane and possibly lead to higher rates for those customers who remain with Citizens after a take-out.

Homeowners with a Citizens policy will be kicked out of the company at renewal if a private insurer offers a policy that is up to 15 percent more expensive than Citizens.

Citizens' cap on rates would apply by territory, not by policy, so rate hikes could go up faster for some homeowners.

Toluse Olorunnipa, Times/Herald Tallahassee Bureau

Florida property insurance changes pass Senate committee 03/07/13 [Last modified: Thursday, March 7, 2013 9:41pm]
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