Citizens Insurance Overhaul Bill Headed For Final Vote In FL Senate
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TALLAHASSEE (CBS4/NSF) – The decision about a bill which will potentially overhaul of Citizens Property Insurance Corp is headed for final vote in the Senate and it could drastically determine how much you pay for your homeowners insurance.
But in preparing a bill for a final vote, rifts were evident in the Senate between Republican lawmakers over sinkholes and between the GOP and Democrats over how high rates could go.
Proponents say the proposed fix (SB 1770) is needed to reduce the size and financial risk the state-backed agency places on all policy holders in Florida and hope to make the company once again the insurer of last resort.
But opponents claim the measure could hinder the recovery of Florida’s real estate market by raising costs on homebuyers and homeowners.
An uproar from residents a decade ago over spiraling property insurance coverage led policymakers to keep Citizens rates below market level, and the fear of political blowback from allowing them to rise dramatically remains.
The Senate is expected to take a final vote on the bill next week.
The version that is finally sent over to the House will come with one provision that the author, Sen. David Simmons, R-Maitland, wanted to remove as part of a compromise with his House counterpart, Bryan Nelson, R-Apopka. But Simmons’ fellow senators wouldn’t let him take the provision off.
Simmons had proposed dropping a part of the bill that would have lifted Citizens’ exemption from bad faith claims, which blocks certain civil actions.
Instead, the Senate voted 23-16 to keep its original language, a sort of show of resolve to other players in the legislative negotiating dance.
“To be dictated to on the front end, by the governor or the House, is objectionable to me,” said Sen. Jack Latvala, R-Clearwater. “This is the Florida Senate, and I think if we have a position we need to support that position as long as we can.”
However, the omnibus package comes with a few changes toned down at the request of Gov. Rick Scott, who once sought to dissolve Citizens by 2015.
The most prominent is that current policy holders will continue to face a limit on premium increases of 10 percent a year.
“If you’ve got the benefit, you’re going to keep those benefits,” said Simmons.
Sen. Wilton Simpson, R-Trilby, was able to get support for one of his amendments, which brings sinkhole coverage into the bill.
Simpson’s proposal, which found support from other Tampa area legislators over Simmons’ objection, would allow residents to get coverage for sinkhole losses at either full coverage, or at 25 or 50 percent of the amount of the structure.
The Citizens reform package also creates an inspector general for personnel matters and a clearinghouse that is expected to drive 217,000 of the state-backed company’s 1.3 million policies into private hands.
The proposal also imposes rates for new policies in several southern and central Florida counties that could be 60 percent to 87 percent higher than current rates, and makes the executive director a direct appointment by the governor and chief financial officer.
Several senators expressed concern that even the hikes on just the new policies could slow real estate sales.
“We want to encourage people to buy homes and home insurance is so high this will not help the economy,” said Sen. Eleanor Sobel, D-Hollywood.
With Florida having gone seven years since a direct hit by a major hurricane, Sen. Jeff Clemens, D-Lake Worth, questioned the need to change the rates. He claimed Citizens has enough to weather a one-in-100-year storm before using up reserves, while slowly “gliding” rates upward.
“If they have enough to cover a Hurricane Andrew sized storm, whatever glide path they came up with several years ago is working,” said Clemens.
Sen. Bill Montford, D-Tallahassee, said if anyone was going to object to the proposal they need to have an alternative to offer. And he said inland residents need coastal residents to pay their fair share.
“I have a hard time explaining why someone is able to build a home on the coast and expect to have somebody else pay their insurance,” Montford said. “I’ve got people living in mobile homes, driving used cars, and they’re having to pay a subsidy.”
Simmons said the biggest mistake he made was not pushing to eliminate the wind-only coastal accounts that offer the lowest rates but create the largest risk for themselves and other property owners if a storm hits.
“We are all subsidizing a distinct minority of policies,” Simmons said.
Among the changes to Citizens in SB 1770:
-A computerized clearinghouse would be established that would determine if private firms are available.
-Requires new policy holders to pay actuarially sound figures based upon rates offered locally by private firms.
-Establishes an inspector general within the company.
-Requires by Jan. 1, 2019 no new policies will be written for residential property worth more than $500,000; with the rate dropping $100,000 a year from the current $1 million maximum.
-Excludes Monroe County from the policyholder changes until a “reasonable level” of private firms are available.
-Screened enclosures worth at least $3,000 and carports on a mobile home may once again covered.
-Renames the Florida Hurricane Catastrophe Fund Finance Corporation to a less menacing State Board of Administration Finance Corporation.
-The governor and chief financial officer, rather than the company’s board, would choose the executive director.
-Requires the Senate to confirm board members appointed by the governor, chief financial officer and the Senate president.
-Reduces board member terms from three years to two.
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