Senate Panel to Prep Massive Changes to Property Insurance Market

1/23/2013
By: Gray Rohrer
The Florida Current

Homeowners in Florida could be looking at a vastly different property insurance market next year if all of the proposals heard Wednesday by the Senate Banking and Insurance Committee make it through the Legislature.

Plans to shrink the Florida Hurricane Catastrophe Fund, increase the 10 percent cap on rate hikes for Citizens Property Insurance Corp., create a clearinghouse for customers to help usher them into the private sector and away from Citizens, consolidate wind mitigation programs and reduce exposure to coastal homes, and preventing second homes from going into Citizens were all suggested to the panel.

Lawmakers have been searching for ways to reduce the size of state-run Citizens, which has 1.3 million policies and is the largest insurer in the state. Citizens is backed in part by assessments on non-Citizens customers in the event of a cataclysmic hurricane.

“What I call getting Florida off the drug of artificially low insurance rates,” Committee Chairman David Simmons, R-Maitland, said.

Simmons said most of the proposals heard Wednesday -- many of which were proffered by business groups such as Associated Industries of Florida and the Florida Chamber of Commerce -- will make it into a proposed committee bill he said should be ready by Feb. 1. If members have issues with some provisions, they’ll be taken out, he said.

Most members on the panel are in favor of “doing something rather than nothing” to move more policies into the private market, but many of the proposals have been suggested before and failed to get through the Legislature in recent years as individual bills.

Other proposals, however, are fairly fresh. Insurance Consumer Advocate Robin Westcott suggested consolidating Citizens’ wind mitigation programs in the Department of Emergency Management, and said about 70 percent of policies in Citizens’ coastal account have no wind mitigation devices at all, which could reduce the state’s overall risk.

Sen. Jeff Brandes, R-Tampa, suggested letting private companies share the risk of individual policies. Under the proposal, private companies would take on a portion of the risk of a Citizens policy while taking on the responsibility of administering the policy.

Despite the historic property insurance divide in Florida pitting coastal lawmakers versus inland and North Florida lawmakers, Simmons said his bill will be able to steer clear of political pitfalls.

“We’re not going to engage in it. We’re not going to need to. We’re going to provide an alternative, a sound alternative, to the coastal policyholders and therefore the policymakers -- and I’m talking about the leg who rep those areas -- that we’re going to provide a palatable alternative to them so that they can look at this and say ‘You know what? I’m not going to be hurting my own constituents,’” Simmons said.