Citizens rate increases marching to legislative approval in Tallahassee

The number of Citizens policies swelled from 820,000 in 2003 to nearly 1.3 million in 2010 as private insurers left the state in the wake of the busy 2004 and 2005 storm seasons. Private insurers say they can’t compete with Citizens’ low rates.

Willie J. Allen Jr. | Times (2004)

The number of Citizens policies swelled from 820,000 in 2003 to nearly 1.3 million in 2010 as private insurers left the state in the wake of the busy 2004 and 2005 storm seasons. Private insurers say they can’t compete with Citizens’ low rates.

TALLAHASSEE — Bills to increase rates for Citizens Property Insurance and push its policyholders to the private market are on the march in the Florida Legislature.

"We now have the chance to get Citizens back to the market of last resort, which is what Citizens was intended to be to begin with," Rep. Jim Boyd, R-Bradenton, sponsor of HB 1243, told the House insurance and banking subcommittee Wednesday. "There's a big opportunity to get private capital back."

Proposals call for allowing Citizens to increase premiums by up to 25 percent a year, gradually eliminating coverage for some homes valued at more than $500,000 and tightening eligibility requirements so property owners could enroll in Citizens only if the policies they find cost 25 percent more than Citizens.

With support of the Republican-led Legislature and Gov. Rick Scott, the reforms are likely to become law.

Heather Carruthers, mayor of Monroe County, which includes the Florida Keys, told the House panel that increases would be too much of a financial burden on people who rely on Citizens.

"These are the teachers, the nurses, the people who bring you your food when you visit," she said.

Despite concerns, the House committee passed the bill on an 11-3 vote.

Rep. Janet Cruz, D-Tampa, voted against the measure.

"We should not be in the business of insuring homes or businesses. But that's where we are," she said. "I just worry about the rates and the rate hikes that we're imposing."

Citizens officials have been warning that their premiums aren't high enough to cover losses incurred if a 1-in-100-year storm hits the state. In that case, all the state's insurance policyholders, including those not in Citizens, would have to pick up the tab.

Meanwhile, as private insurers left the state in the wake of the busy 2004 and 2005 storm seasons, the number of Citizens policies has swelled from 820,000 in 2003 to nearly 1.3 million in 2010.

Private insurers say they can't compete with Citizens' low rates.

The Senate banking and insurance committee passed a bill similar to Boyd's by a vote of 6-4 on Tuesday.

Sen. Alan Hays, R-Umatilla, sponsor of SB 1714, said he doesn't like the idea of raising rates, but when it comes to Citizens, he believes it's essential to keep the program solvent if a major storm hits.

"Currently, we're playing Russian roulette," he said.

Sen. Mike Fasano, R-New Port Richey, was among those who voted against the Senate bill.

"Every time I turn around, I see another rate increase," he said. "It's a tax. It's a fee. Call it what you want."

Sen. Gwen Margolis, D-Miami, argued that the bill strikes a blow to the already struggling real estate market.

Homes won't be sold, she said, because owners won't be able to get property insurance.

"The cost of insurance is just too high," she said. "We are not going to get new residents in Florida as a result."

Janet Zink can be reached at jzink@sptimes.com or (850) 224-7263.

Citizens rate increases marching to legislative approval in Tallahassee 03/30/11 [Last modified: Wednesday, March 30, 2011 11:42pm]

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