Policyholders with Citizens Property Insurance could soon be stripped of the opportunity to prevent Citizens from transferring their policy to a private insurer.
Currently, property owners are notified when an insurer wants to take their policies out of state-run Citizens and can block that transfer. And many have.
As the St. Petersburg Times has reported in recent weeks, policyholders have been alarmed that many of the small insurers approved to take policies from Citizens have poor financial ratings and little experience.
A recommendation to eliminate consumer choice is part of a draft report being discussed by an 11-member, state-appointed group whose goal is to help Citizens Property return to its historic role as the state's insurer of last resort.
Another key change being considered by the Citizens Property Insurance Mission Review Task Force: letting Citizens aggressively raise its rates, perhaps as much as 20 percent a year, to better reflect its risk in the market.
Task force chairman Bruce Douglas described the 18-page report as a "work in progress" that won't be voted on until next month.
He cautioned against assuming any specific recommendation will be approved. However, he added, many proposed changes have already been vetted by task force members and are in line with the group's primary goal.
Citizens was established in 2002 for property owners who couldn't find insurance coverage in the private market. It combined the old insurers of last resort for property coverage and windstorm coverage. By law, its rates were set higher than the marketplace as a disincentive, and it gave private insurers hundreds of dollars per policy if they would agree to take policies out of Citizens.
Over time, that mission has gotten muddy. Citizens has become not only the largest insurer in the state but also sometimes the best deal on price.
Sensitive to complaints of soaring insurance rates, the Legislature has kept Citizens from making rate increases the last two years, a freeze that continues through 2009. The premiums for most types of coverage are based on rates in effect since 2005.
In 2007, the Legislature also gave Citizens policyholders and their agents the right to reject offers from private insurers to take their policies out of Citizens.
Largo homeowner and former Citizens policyholder Eliska Adema was appalled at the idea of losing that freedom.
Adema's policy with Citizens was recently taken out by Homeowners Choice ("not my choice," she said). Adema said her agent never notified her about the change, and by the time she found out, it was too late to opt out.
She's concerned others may be forced into startup insurers with poor marks from financial rating companies like TheStreet.com.
Citizens spokesman John Kuczwanski said a "relatively low" percentage of homeowners have refused takeout offers, but he did not have any data available Thursday.
During a meeting Wednesday in Jacksonville, task force members spent more than a half hour debating just the first of five listed recommendations: repealing a state law that permits applicants to still qualify for Citizens if the outside offers from an insurance company would charge more than 15 percent higher than Citizens.
Repeal of the so-called "15 percent eligibility rule" isn't the only unresolved issue.
"I can already tell there's going to be disagreements," said William F. "Chip" Merlin, a Tampa lawyer and task force member appointed by Gov. Charlie Crist.
For his part, Merlin agrees with preventing people from staying with Citizens when similar coverage is available from a private insurer approved by the state. But he is concerned about any language changes that could lead to rate shocks.
"If people find their insurance rates going up 300 percent, we'll be in the same position we were in before," he said. "That's the last thing we need in this economy."
Among other ideas not part of the draft report that were discussed were eliminating the wind pool and not covering any new construction within 2,500 feet of the Gulf of Mexico or the Atlantic Ocean.
Citizens holds just over 1-million policies, down 400,000 from its peak a year and a half ago.
To Douglas, that's evidence the insurance market is coming back, with increased competition leading to lower rates.
"The voluntary market every month is increasing its market share in Florida, so we don't have an insurance crisis any more," he said.
The task force has scheduled one more meeting — in Tampa on Jan. 6 — before issuing recommendations to the Legislature by Jan. 31.