TALLAHASSEE — State lawmakers' push to reduce the size of Citizens Property Insurance Corp. by allowing unregulated out-of-state insurers to take over its policies hit a political brick wall Tuesday.
Consumer-focused lawmakers approved an amendment to House Bill 245, the so-called surplus lines bill, forcing insurers to get a signature before taking over a policy from Citizens. The amendment, which passed the House in a close vote, killed plans — at least for this year — to reduce the number of policyholders with the state-owned insurance giant.
Proponents of the original bill say the amendment amounts to a "straitjacket" that strips down the bill and will discourage private insurers from coming to Florida's helter-skelter market.
"With this amendment on, I don't think a surplus company is going to come in," said Sen. Garrett Richter, R-Naples, who sponsored the bill in the Senate. "I think they'll put their capital elsewhere."
Rep. Jim Boyd, R-Bradenton, who sponsored the measure in the House, said the amended bill "might as well be dead," and temporarily postponed it before the House could vote to send it to the governor.
With 1.5 million policies, Citizens is the state's largest insurer. Industry fiscal hawks warn that a major hurricane could sap its resources, leading to billions of dollars in charges for insurance policies in the state.
Many private insurers have shunned Florida because of its precarious position between the Gulf of Mexico and the Atlantic Ocean. Richter said the original bill had plenty of consumer protections — including a $50 million surplus requirement and a solid financial rating.
A bipartisan coalition in the Senate and the House disagreed, voting to add the language requiring consumers to approve the policy takeover with a signature.
Consumer advocates say the "opt-in" amendment is crucial because surplus lines insurers don't have the same protections as licensed carriers in the state.
Before the amendment, the proposal was expected to affect up to 50,000 of Citizens' 1.5 million policyholders.
The House vote on the amendment was the closest floor vote in the Republican-dominated House this year. The measure passed, 63-52, with support from nearly all Democrats and about a third of House Republicans.
"The policyholders of Florida won," said Rep. Frank Artiles, R-Miami, who was among the most outspoken critics of the original bill. "At the end of the day, they were represented. We did the right thing."
With little legislative help in its effort to slim down, Citizens has launched its own plan to move policyholders off its rolls.
Citizens' risk-reduction effort includes last year's premium increase for sinkhole coverage, a roof-inspection requirement for old homes and a statewide reinspection program for homes receiving wind-mitigation discounts. Last month, the company scrapped wind coverage for homes worth more than $1 million.
This week, the state-run insurer appointed a new interim president to replace Scott Wallace, whose resignation will take effect next month. Tom Grady, the commissioner of the Office of Financial Regulation, will take the helm of Citizens on an interim basis.