TALLAHASSEE — A controversial plan to loan $350 million to established private insurers to take out policies from the state-backed Citizens Property Insurance Corp. made its legislative debut Tuesday to an inquisitive House panel that will oversee insurance issues.
Responding to concerns raised over a program first announced earlier this fall, Citizens executives walked members of the House Insurance & Banking Subcommittee through the details of a plan that backers say could reduce Citizens' ranks by up to 300,000 policies
Subcommittee members, meeting for the first time, called on Citizens to take even more aggressive action to reduce the number of policyholders in the state-backed entity that now insures nearly 1.5 million homes, condos and businesses.
Proposals ranged from making new Citizens customers pay much higher rates to re-examining the use of surplus-lines carriers and allowing newly formed companies to qualify for cash incentives and loans.
"I think we need to do everything we can to make Citizens smaller," said Rep. Bill Hager, R-Boca Raton.
Earlier this year, Citizens' board of governors approved a plan to provide $350 million in low-interest loans to companies willing to take out policies from Citizens and keep them for at least 10 years.
The proposal, available only to qualified, existing companies, has been temporarily sidetracked after legislative leaders and critics complained the deal was moving too fast and had not been property vetted.
Sharon Binnun, Citizens' chief financial officer, said the insurer continues to stand behind the program and is formulating a similar effort aimed at new companies that may not have an existing insurance track record but have the financial capability to take policies from the state-backed pool.
Subcommittee Chairman Bryan Nelson, R-Apopka, said lawmakers will look at myriad options to reduce the growth of Citizens, which despite shedding nearly 250,000 existing policies this year, continues to grow, in part because of attractive premiums that, depending on the region, can be far cheaper than private insurance.
Nelson faces skepticism within his own panel from coastal members who represent regions in which Citizens coverage is the only game in town. Shrinking Citizens' base, though financially beneficial in the long run, could hurt coastal homeowners and put pressure on lawmakers. It's a political hot potato.
Many inland lawmakers, however, say Citizens is a house of cards that will blow down if a severe storm hits, resulting in statewide assessments that will cost all insurance customers regardless of where they live.
"I am not going to let Miami-Dade County bring down the rest of the state," said Rep. John Wood, R-Haines City.