The Florida House is poised to stand up for homeowners after the Senate failed to last week. A Senate bill that would allow unregulated insurance carriers to be included in the alternative choices for homeowners covered by the state-run Citizens Property Insurance Corp. is expected to die quietly without a House vote. That would be good for consumers, and several Tampa Bay senators who voted for the legislation risked exposing their constituents to huge premium increases and should be held accountable.
House Speaker Will Weatherford, R-Wesley Chapel, told the Tampa Bay Times editorial board Monday that the legislation lacks support in the House and will not be coming up for a vote before the legislative session ends Friday. He should hold firm, because there is so much to dislike about the bill that it should come with a warning: Buyer beware.
Supporters of the bill, SB 1672, call it a free-market alternative providing greater choices for customers. Hardly. The unregulated insurance companies, known as surplus line carriers, can appear to be a lower-cost substitute for Citizens. But they can raise their premiums at will and are not backed by a state insurance fund if they fail to pay claims. It's a risk the state should be discouraging, not enabling.
Just last year, legislators prohibited the unregulated carriers from joining a state clearinghouse of companies offering coverage to homeowners leaving Citizens. To shrink the size of Citizens, the state pushes current customers to the private market if a company in the clearinghouse can match Citizens' coverage while offering a premium at least 15 percent less than Citizens' rates.
The bill included a mandatory disclaimer that the surplus lines are not regulated by the state, but customers still faced the potential of inadequate coverage or higher prices down the road if they had selected their carrier based exclusively on the initial premiums. Customers also could be lured by the teaser rate and mistakenly believe inclusion in the clearinghouse meant the unregulated companies have the state's seal of approval. Despite those concerns, the Senate last week approved its version of the bill 22-16 and sent it to the House. To their credit, a trio of Tampa Bay area senators refused to put insurance companies' profits ahead of consumer interests and voted against the bill: Sens. Arthenia Joyner, D-Tampa; John Legg, R-Trinity; and Wilton Simpson, R-Trilby. The Tampa Bay senators who voted for the bill and against consumers: Republican Sens. Jeff Brandes of St. Petersburg, Jack Latvala of Clearwater and Tom Lee of Brandon.
Surplus line carriers are insurers of last resort and they should remain that way. If they want a greater share of the customers served by Citizens, the providers should join the Florida Insurance Guarantee Association, as their regulated counterparts must do, to ensure adequate reserves are available to meet potential claims. The House is right to protect consumers and kill this bill.