The discriminating pricing scheme being considered by Citizens Property Insurance Corp. with the encouragement of Gov. Rick Scott would not be tolerated from private insurers. Yet the state-run insurer's bad idea to jack up the price of policies for new customers by up to 30 percent will get another hearing today by a Citizens Board of Governors committee. That should be its last stop. Such a scheme has no place in a government-backed insurer either.
First floated last year — but never brought before the Legislature for approval — this bad idea turns on Citizens' self-serving claim that a 2009 law capping its rate increases at 10 percent annually was only meant to apply to renewal policies. Chief Financial Officer Jeff Atwater, who was Senate president when the legislation passed, has already rejected that interpretation, with little heed.
Scott has encouraged this end run around the Legislature. Convinced that the state's exposure to paying Citizens claims after a major hurricane is too great, the governor has challenged Citizens officials to find new ways to add revenue or reduce liabilities. Nevermind that it's state law, not executive fiat, that has set Citizens' parameters.
Nor does it seem to matter that this will be a double whammy for some Citizens customers who under state law can see their Citizens policy canceled if they live in sinkhole-prone areas. If they pass an inspection they could once again become a customer — but at a higher rate.
The same reasons the Legislature passed that rate increase cap still apply in a state where Scott is supposed to be looking out for average Floridians. Homeowners still need a glide path to higher rates, and unpredictable insurance prices would further stall the state's real estate recovery. Scott should be balancing those real-world consequences with his concern that Citizens has grown too large. The state-run insurer also should be mindful of the state law that caps rates and not circumvent its intent to gouge new customers.