Letters to the Editor: Senate Bill
will Increase Property Insurance Rates
By: Jay Neal
A sweeping property insurance bill, SB 1770, is rapidly progressing through the
Florida Senate and may be up for a final vote as early as this week.
The good provisions in the bill include a clearinghouse within Citizens Property
Insurance designed to keep policies out that belong in the private market and a
new state agency designed to help private insurers find cheaper reinsurance.
Other good provisions would establish an inspector general within Citizens and
require that the state insurer follow the same procurement rules as other state
agencies. All reasoned common sense measures.
The bad provisions include making the Citizens president and CEO a direct
political appointee of the governor and state CFO. The bill would weaken the
Citizens Board and remove the authority of the Office of Insurance Regulation to
review and approve rates. In other words, a political appointee would set rates
with little oversight. The bill would also codify the ability of Citizens to
make loans to private carriers out of surplus, a move that generated
considerable controversy when it was attempted last year. And, as a gift to the
powerful reinsurance lobby, it would increase the annual 10-percent rate cap by
30 percent to pay for expensive private reinsurance.
All new Citizens policies after this July would no longer be subject to the 10
percent annual rate increase cap. In fact, in most rating territories, they
would be set at no less than the highest average rate among the top 20 insurers
writing in the state. According to a Citizens analysis of the rate impact this
would have, personal lines residential policies would immediately increase by an
average of 18.87 percent. Wind-only policies would skyrocket by an average of
54.49 percent. Not just new, but all policies on commercial residential,
non-homestead, and rental properties with less than a 12-month lease agreement
would increase immediately. All standard multi-peril policies for homes with an
insured value of $300,000 or more would also be subject to the higher rates. The
impact on the still fledging real estate market could be devastating.
This bill is advancing despite evidence from many, including the Insurance
Consumer Advocate and even some private company CEOs that the current 10 percent
glide path is working and will result in actuarially sound rates in most areas
of the state within a few years. Nearly 300,000 Citizens policies moved into the
private market in the latter part of last year without surplus loans and without
huge rate increases.
Don't wait until you open your next renewal notice to do something. Go to
www.flsenate.gov, contact your state senator and tell them to get rid of the bad
and the ugly parts of this bill.