TALLAHASSEE — Customers of Citizens Property Insurance won't face an increase in premiums for another year under an insurance package overwhelmingly approved by the Legislature on Thursday and sent to the governor.
But the measure, dubbed the "Homeowners Bill of Rights Act," offers no similar protections for customers of private insurers.
And the final product is more a mishmash of changes to the insurance code than any broad reform lawmakers suggested they would seek during dramatic public hearings where they put private insurers under oath.
The bill (SB2860) hikes penalties that regulators can charge insurers and shuts some avenues that insurers have used to raise rates. But it also draws upon the state-run Citizens' reserves for a loan program for startup private insurers.
"So much of what we were really driving through remains in the bill. … It's a very strong, consumer-driven bill," said Sen. Jeff Atwater, R-North Palm Beach, who steered the bill all session but compromised on some anti-industry provisions in recent days to win a compromise with the House.
The measure includes some provisions Atwater pushed for early this session, such as forcing insurers to set rates based on state-approved hurricane models. It also ends an arbitration process, which had been the insurer-preferred way to settle rate disputes.
The bill also halts a practice approved by the 2006 Legislature that has been blamed for some of the runup in rates. Insurers that used reserves to cover potential losses — instead of buying reinsurance — had been allowed to charge customers more for that exposure.
Atwater said he believes those measures will ultimately help lower rates.
Under the loan program, lawmakers agreed to borrow $250-million from Citizens' reserves to help startup insurers, a move the governor has criticized. Lawmakers say the move will help reinvigorate the private market; and in a tight budget year, they had no other money to turn to.
Citizens Property Insurance Corp., which insures roughly one in three Florida homes, has been fighting the move.
"What may sound like a good idea is going to have extremely difficult and unintended consequences," said Bruce Douglas, Citizens board chairman.
Gov. Charlie Crist's office indicated Thursday that he will probably sign the bill. However, he has the ability to eliminate the loan program through his line-item veto power.
House Democrats said they supported the bill because of the extended rate freeze. The House approved the plan 117-0 Wednesday. The Senate vote Thursday was 33-5.
But Democrats criticized much of the bill, including a provision that allows Citizens to insure homes worth up to $2-million, saying it would add risk to the state-run insurer whose exposure is close to half-a-trillion dollars.
House insurance negotiator Dennis Ross, R-Lakeland, said he agreed in principle it was not the best idea, but it was a step toward making Citizens bulk up its reserves, because it brings in more premium dollars.
"This is akin to somebody who has been addicted to drugs and now must go through a methadone program," Ross said. "Is this the best thing to do in a vacuum? No … but in order to maintain a market, we've got to do this incrementally."
The insurance industry, whose lobbyists had taken over the Capitol rotunda this week, warned that the bill would further stymie the state's private insurance market.
"Consumers don't benefit when they have fewer insurance options," said State Farm lobbyist Mark Delegal. "We need long-term solutions that let insurance companies offer products at fair prices that insure the company can be there to pay claims when the storm hits."
The bill, however, does speed up the only remaining rate appeals process, infamous for taking a long time, even years.
And in another nod to the industry, the measure prevents regulators from denying rate hikes solely on whether an insurer purchases a certain set amount of reinsurance set at a fairly high-priced level.
The bill also reverses a ruling by regulators that prevented large property insurers like State Farm from offering their auto customers special "multiline" discounts even if their customers' homes are insured by Citizens.