Bruce Douglas made good on his word Thursday.
The Citizens Property Insurance board voted unanimously to delay a decision on whether to increase rates on wind-only policies an average of 55.8 percent starting March 1.
The move, endorsed by Gov.-elect Charlie Crist, incoming Chief Financial Officer Alex Sink and several key lawmakers, tosses the issue to the Florida Legislature when it meets during a special session Jan. 16.
It also grants a reprieve to about 400,000 wind-only Citizens policyholders, some of whom could see their premiums nearly double in 2007.
Douglas, Citizens' board chairman, told the Times last month he would ask the board to consider taking the rate hike off the table. Not because Citizens' rates don't have to be increased, he said, but because the increase was too much, too soon.
"Premiums are not going to go down,'' Douglas said Thursday, adding that increases could be spread over three to five years. "But the people of Florida can't absorb this increase all at once.''
Also, it was the Legislature, not Citizens, that spurred the sharp increase. The rate hike was part of a sweeping insurance reform bill passed last May that required Citizens to calculate its rates as if it were buying reinsurance from the private market, something it doesn't do.
Citizens, the state's insurer of last resort which has swelled to nearly 40 percent of the property insurance market, has already won approval for a 25.9 percent rate increase set to go into effect Jan. 1.
The March 1 rate hike would add close to $1-billion to Citizens' reserve. But it would also mean nearly half of the company's 1.3-million policyholders would see their premiums jump by 80 percent, with some rising even more.
When that became apparent last month, Douglas stepped in. And within days, lawmakers from both parties joined the chorus demanding the law be changed.
Still, it was a gutsy move on Citizens' part. By law, the company must do what the Legislature tells it to.
By tabling the issue and sending it back to the Legislature, Citizens essentially found a way to appease anxious policyholders, give lawmakers an out, and remain within the law.
"The only concern I have,'' said board member Carlos Lacasa, "is the loss of credibility with the Legislature if we don't follow the law.''
Douglas shook his head and replied that Citizens has no intention of going against the statute.
"But the law many change,' he said. "If not, we'll revisit the request and file with (state regulators).
"The question now is in the hands of the Legislature, and I'm hopeful they'll give us relief and the people of Florida relief."
As the Legislature takes up the insurance issue next month, Douglas said Citizens also will press for other changes, including allowing Citizens to write all the wind policies throughout the state.
Barring a series of major storms, the premiums collected from those added policies would add hundreds of millions to Citizens reserves.
After the 2004-05 hurricane seasons, Citizens had a deficit of $2-billion. The 2004 deficit has been paid, and a large part of the 2005 deficit was offset when lawmakers used $715-million of taxpayer money to reduce the debt.
The remainder of the 2005 deficit will be paid by all Florida homeowners in the form of two assessments on their insurance premiums: 2.5 percent this year, and 1.4 percent for the next decade.
But Citizens also could see a windfall of nearly $200-million over the next 10 years because of a restructuring of its debt that allows it to sell tax-exempt bonds.
The board also approved its 2007 budget, which showed a doubling of earned premium, from $1.6-billion to $3.58-billion, and a cut in administrative costs to 15 percent, about half the industry average.
And in a clear sign that private insurers are not coming back to the Florida market, Citizens is taking in about 55,000 new policies a month, most of them outside the high risk, or coastal, area. That's because it already insures most of the homes along the coast.
The company has just 750 employees, including about 150 in its Tampa office. But Douglas said there are plans to add about 300 more next year.
"People don't have complaints about service,'' he said. "They have complaints about rates.''
Tom Zucco can be reached at firstname.lastname@example.org or (727) 893-8247.