Bill to Cut Catastrophe Risk for Citizens Property Insurance Passes House
Feb 6, 2012
The following article was published in The Sunshine State News on February 6, 2012:
Bill to Cut Catastrophe Risk for Citizens Passes House
By David Royse
Passage of the bill Friday came over the objection of many coastal legislators who said allowing private companies known as “surplus line” firms take over some Citizens Property Insurance policies, because they’re largely unregulated by the state, could end up raising rates. They also may still not have enough money to pay claims.
Republican backers of the bill responded that the marketplace will work it out: If people don’t like being a customer of a surplus lines insurer, they can always ask to return to Citizens, the state-backed company that is now the state’s largest property insurer.
The measure, sponsored by Rep. Jim Boyd, R-Bradenton, passed 66-48 and now goes to the Senate.
The bill, HB 245, is aimed at shrinking Citizens. The company’s growth — and years of trying to keep its rates low to be palatable to customers who have no choice about who insures their coastal property — makes many lawmakers nervous at best, outraged at worst. Because the state underwrites the company’s liability, a massive storm would result in the state’s residents being assessed fees to make up any shortfall, and the state’s taxpayers could be on the hook as well.
Many conservatives say the state shouldn’t be in the insurance business — that it’s essentially a socialist model.
The bill, backers say, will give some customers a choice of remaining in Citizens or going into an unregulated surplus lines company that’s willing to take on their policy.
Find this article here: http://www.sunshinestatenews.com/print/4513576