Wednesday, February 21, 2018
Business

Legislators want to steer Citizens policies to unregulated alternative

TALLAHASSEE — In their zeal to shed policies in the state-run Citizens Property Insurance, the Florida Senate is poised to approve a bill that gives homeowners a low-cost — though unregulated — insurance alternative.

Opponents say the new policy — which would allow Citizens customers to select a "surplus lines carrier" when their policy is up for renewal — is a wolf in sheep's clothing that could mislead homeowners into thinking they are getting the same insurance for less. Proponents say the idea is a free-market alternative and that homeowners must weigh their own risk.

"This is something that is provided as an option to a consumer,'' said Sen. David Simmons, R-Altamonte Springs. "Should we as a Legislature prohibit them after having the opportunity?''

Under the bill, SB 1672, unregulated insurance sold by surplus lines carriers would be included in the list of options homeowners can choose from in the state-run clearinghouse when their policy is up for renewal. These companies would have to offer the same coverage as Citizens, with rates at least 15 percent less than Citizens. They must also include a disclaimer that surplus lines insurance is not regulated.

Unlike traditional insurance companies, surplus lines were created as insurers of last resort for those who couldn't obtain coverage in traditional insurance markets.

"This is a classic bait and switch,'' said Rep. Frank Artiles, R-Miami, who is opposing a similar bill, HB 1109, awaiting a vote in the House. "People decide with their wallets and if they are given a choice between an admitted carrier (traditional insurance) and surplus lines, many people are not going to read their policies and realize they're not apples and oranges."

Florida lawmakers have been trying to trim the number of policies in the state-run Citizens Property Insurance Corp. to reduce its exposure.

Last year, legislators passed a requirement that homeowners cannot renew a Citizens insurance policy if a licensed insurance company offers comparable insurance to what Citizens offers. Citizens is allowed to raise it rates 10 percent each year.

As of March, 10 insurance companies were listed on the state-run clearinghouse as an alternative to Citizens. But if a homeowner is not offered an alternative policy from one of those companies and wants to leave Citizens, the bill allows him to select a surplus lines carrier.

Since the state launched its aggressive push to de-populate Citizens several years ago, the number of policies held by the company has dropped from a high of 1.6 million to about 940,000, said Christine Ashburn, vice president of legislative affairs at Citizens.

While Citizens didn't ask for the surplus lines bill, she said, the company doesn't oppose it. She acknowledged that homeowners might be tempted to go with the unregulated insurer, especially if the surplus lines carrier offers a competitive premium.

"Where we are in insurance in Florida is everyone is buying based on the price,'' she said.

That worries Pasco County Tax Collector Mike Fasano. The former state senator fought to defeat a similar bill last year and is warning constituents this year.

"Allowing surplus lines insurers to participate is a dangerous step that could lead to financial ruin for seniors, families or others struggling to keep up with high insurance premiums,'' he wrote in a letter to the Tampa Bay Times this week.

"Surplus lines companies, which are not regulated by the state of Florida, can raise rates at will. These companies often entice homeowners into signing with them by offering a low 'teaser' premium for the first year, and then rapidly increasing that premium during subsequent renewal periods.''

Simmons said that, unlike other insurance options, homeowners have three years to drop their surplus lines policies and return to Citizens and will be given detailed disclosure information alerting them to the risk they take with an unregulated carrier.

Artiles, who works as a public adjuster for insurance policies, fears that if enough people sign up for lower-cost surplus lines coverage, it could destabilize the private insurance market in Florida.

"How can an admitted carrier compete against an unregulated one?" he said. "It's like giving somebody a shotgun and the other guy a spoon and say they can compete. They can't."

A similar bill died in the House last year in a 61-40 vote and he fears that election-year pressures have persuaded several legislators, many of them Democrats, to switch from opposing the bill last year to supporting it this year.

"There are a lot of people who are changing their votes because they are running in re-election and they need to raise money,'' he said. "This is nothing more than back door deregulation and they're masking it under free market while knowing that people don't read their policies.

Contact Mary Ellen Klas at [email protected] and @MaryEllenKlas.

Comments
Career Q&A: Nut allergy is a serious workplace concern

Career Q&A: Nut allergy is a serious workplace concern

Q: My manager has recently started eating nuts at her desk, which is located right next to mine. Unfortunately, I have a serious nut allergy, so any contact with them could produce a life-threatening reaction. Even foods which contain tiny pieces of ...
Updated: 8 hours ago
Yes, we have some bananas: Port Tampa Bay welcomes first shipment in 21 years

Yes, we have some bananas: Port Tampa Bay welcomes first shipment in 21 years

TAMPA — More than two decades after the last bunch arrived on shore, bananas are back at Tampa’s port. More than 3,900 pallets of Chiquita bananas from Ecuador arrived last week at the new Port Logistics Refrigerated Services warehouse.It was the fir...
Updated: 11 hours ago
Guess co-founder steps aside after allegations from Kate Upton

Guess co-founder steps aside after allegations from Kate Upton

Associated PressNEW YORK — Guess Inc. says that co-founder Paul Marciano will give up his day-to-day responsibilities at the clothing company until a sexual misconduct investigation is completed. Model and actress Kate Upton told Time magazine earlie...
Published: 02/20/18
Grocery retailer Albertsons to buy drugstore chain Rite Aid

Grocery retailer Albertsons to buy drugstore chain Rite Aid

Associated PressThe privately held owner of Safeway, Vons and other grocery brands is plunging deeper into the pharmacy business with a deal to buy Rite Aid, the nation’s third-largest drugstore chain. Albertsons Companies is offering either a share ...
Published: 02/20/18
Following deaths from Irma, Florida looks to new rules for keeping nursing homes cool after outages

Following deaths from Irma, Florida looks to new rules for keeping nursing homes cool after outages

After national headlines and a public outcry over the deaths of 14 people at a Broward County nursing home after Hurricane Irma, nursing homes across the state are working to comply with new rules requiring them to have back-up power.But the process ...
Published: 02/20/18
Yoshi — car maintenance that comes to you — launches in Tampa Bay

Yoshi — car maintenance that comes to you — launches in Tampa Bay

A California-based company that promises to bring limited on-site car maintenance directly to you — from an oil change to a fill-up — has picked Tampa Bay as its next pit stop."Anything that your car needs, we’re going to bring to you," said Nick Ale...
Published: 02/20/18

Hernando Business Digest for Feb. 23

Business digestEventsCHAMBER RIBBON-CUTTINGS: The Greater Hernando County Chamber of Commerce will have two ribbon-cuttings in the coming week:• Access Health Care Physicians/Dr. Janice Rodriguez, 5290 Applegate Drive, Spring Hill, 10 a.m. Feb. 23. C...
Published: 02/20/18

Pasco Business Digest for Feb. 23

Business digestBrieflyLOCAL COMMUNITY RECOGNIZED: CHUY’S RESTAURANT TO OPEN: Chuy’s, the Austin-based Tex-Mex restaurant, will open its first Tampa Bay area location this spring near Cypress Creek Town Center in Wesley Chapel. The restaurant at 25750...
Published: 02/20/18
Steve Wozniak charms USF crowd: ‘The human or the technology — what’s more important?’

Steve Wozniak charms USF crowd: ‘The human or the technology — what’s more important?’

TAMPA — Steve Wozniak, the inventor of the Apple personal computer, is the tech genius who sounds less like an engineer, more like a philosopher.Startups? They can be a lot of fun — if started up for the right reason."The purpose should never be, thi...
Updated: 9 hours ago
Epilogue: Tourism community remembers Paradise founder Cedar Hames

Epilogue: Tourism community remembers Paradise founder Cedar Hames

When Cedar Hames spoke, you listened.He was a natural storyteller, always dressed sharp to match his wit and natural elegance. He grew a two-person business in St. Petersburg into a leading tourism, advertising and marketing agency over an esteemed 3...
Published: 02/19/18
Updated: 02/20/18