South Florida Legislators Take Aim at Citizens Property Insurance for Rate Cap

The state-backed insurance company — which also is the largest property insurer in Florida — flirted last year with the idea of allowing larger rate increases for new customers, while keeping the 10 percent cap in place for current policies.

The company backed away from the idea after some state leaders questioned whether it was legal. Now, Miami-Dade County lawmakers want to make it clear the cap applies to all customers.

The legislation also signals that lawmakers are prepared to renew their debate this spring over plans to try to shrink Citizens’ coverage, which now extends to more than 1.4 million Florida homeowners. Some state leaders, including Gov. Rick Scott, have sought for the last two years to scale back the insurer.

Political tension remains between those who want to reduce the size of Citizens and others who think a government-backed insurer remains a vital option for many coastal homeowners.

Scott has argued that Citizens needs to be reduced because in the event of a catastrophic storm season, a shortfall in its finances could result in costly assessments — or a so-called “hurricane tax” — for many Floridians.

Mentioned less often is the fact that the same assessment would also be levied after the failure of private companies, some of which are in worse financial shape than Citizens.

Scott and others contend that Citizens’ rates are artificially low, discouraging private market competition.

But other officials say it is time to step up protections for consumers.

“I have great concerns,” said state Rep. Mike Fasano, R-New Port Richey, who has been critical over efforts to ease regulations on insurers, including Citizens, in the Legislature.

“There’s no question that the property insurance industry has an enormous amount of power and influence in Tallahassee.

“I would like to see some pro-active legislation that would help the consumers and help the little guy.”

Fasano supports bills filed by Sen. Anitere Flores, R-Miami, (SB 96) and Rep. Jose Felix Diaz, R-Miami, (HB 107) that seek to clarify that the Citizens cap applies to all policies, not just existing policies.

“I believe Citizens already, in my opinion, does not have the right to increase rates on new policies above the 10 percent cap,” Fasano said, noting Florida Chief Financial Officer Jeff Atwater also shares that position.

The cap bills have not been scheduled for a committee meeting yet, although property insurance will be a topic in the coming week as lawmakers return to Tallahassee to prepare for the March 5 opening of their session.

The House Insurance and Banking Committee on Tuesday will discuss property insurance as it relates to wind mitigation and assessments.

The Senate Banking and Insurance Committee is scheduled to talk about Citizens on Wednesday.

Citizens has scaled back its coverage to make it less attractive as an alternative. The company has also discussed incentives to try to get private companies to take policies from Citizens.

The interplay between Citizens and the private insurers in the state is illustrated by Liberty Mutual Insurance, the state’s 14th-largest property insurer.

Glenn Greenberg, a spokesman for the company, said Liberty Mutual has not written homeowners coverage “for a number of years” in some coastal counties such as Sarasota, Manatee and Charlotte, although it does provide coverage for renters and condominiums.

However, the company does provide property insurance coverage in many of the other counties, including Polk, and also writes auto insurance throughout the state.

“We are committed to the Florida property insurance market but we make necessary business decisions to ensure that we remain a viable property insurer in the state,” Greenberg said.

“And while we don’t have capacity for as much homeowners business in parts of western Florida due to our concentration of exposures in that area, we do sell homeowners, condo and tenant insurance in many other areas of Florida.”

Fasano said it is the reluctance of many of the private insurers to cover homeowners in the coastal markets that makes Citizens necessary.

“The only choice in town for the 1.4 million Citizens policy holders is Citizens,” Fasano said.

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