THE NEWS SERVICE OF FLORIDA Reports On Significant Changes Made to Citizens Property Insurance Surplus Lines Takeout Bill
Mar 6, 2012
THE NEWS SERVICE OF FLORIDA reported yesterday, March 5, 2012, on the significant changes made to a bill that would allow surplus lines insurers to take policies out of Citizens Property Insurance Corporation. The article is reprinted below.
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SURPLUS LINES BILL CHANGED IN SENATE
By MICHAEL PELTIER
THE NEWS SERVICE OF FLORIDA
Contact news@newsserviceflorida.com
THE CAPITAL, TALLAHASSEE, March 5, 2012…….A bill to allow surplus lines insurers to take policies out of Citizens Property Insurance Corp. without policyholders’ prior consent went up in flames on the Senate floor Monday after amendments were added that gut the bill’s original intent, the Senate sponsor lamented.
Created to depopulate the state-backed insurer by making it easier and more attractive to surplus lines carriers – which are generally unregulated – to enter the state, the bill had been held up for days as backers tried to muster additional support. A flurry of amendments offered Monday made it apparent backers had not succeeded in that endeavor.
Instead, amendments to require policyholders to sign off on the transfer led a litany of other changes that significantly altered the measure brought to the floor by Sen. Garrett Richter, R-Naples and chairman of the Senate Banking and Insurance Committee.
“Consumers have a right to know who is insuring their home and what the insurance product is,” said Sen. Thad Altman, R-Viera. “The insurance that they have chosen should not be taken away from them against their will.”
Richter’s original bill would have allowed surplus lines insurers, typically offshore companies with less stringent state oversight, the ability to take out chunks of Citizens policyholders, who would be automatically switched over to the company but would be given the opportunity to return to Citizens at any time.
Unlike regulated domestic carriers, surplus lines companies are not required to have their rates approved by the Office of Insurance Regulation. To settle fears, the bill required that surplus lines carriers show they have the reserves on hand to handle back-to-back 100 year storms.
Backers said the bill would make it more attractive for additional surplus lines carriers to join the 200 or so others that have already entered the state since the 1990s. More importantly, the bill would help reduce the number of policyholders relying on the state-backed insurer that critics say would be unable to pay all claims in the event of a catastrophic storm.
“The real question is how do we inform (citizens policyholders) of the of the great peril they have in Citizens and that they really ought to get out of there if they can find a company to take them out of there,” said Sen. JD Alexander, R-Lake Wales.
Much of the debate centered on the amendment by Altman that would require policyholders to opt in to the program instead of being assigned by default. Further, the amendment required them to accept the surplus policy in writing. After lengthy debate, the amendment was approved on a 21-18 vote.
Following the vote, Richter said opponents had successful turned attention away from the bill’s original intent, to reduce the risk of the state-backed insurer that now handles nearly 1.5 million policyholders. He said in no uncertain terms the amendment guts the bill by making the market completely unattractive to potential surplus lines carriers.
“That amendment will kill the effectiveness of what we are trying to do,” Richter said.
The measure is expected to be up for a final vote Tuesday. It then travels to the House, which Richter says does not support the opt-in provision. Senate President Mike Haridopolos, R-Merritt Island, tried to stay upbeat on Monday, saying anything can happen during the session’s final days.
“We’re trying to depopulate Citizens,” Haridopolos said. “Because every one of us, let alone 19 million Floridians, are on the hook, should Citizens have to pay a big bill.”
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3/5/12
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