By: Randy Schultz
Palm Beach Post
Unless attitudes change, the Florida Legislature can do more for property insurance customers by doing less. That’s especially true when it comes to Citizens Property Insurance Corp.
Plenty of things are wrong with the state-run insurer of last resort. Among other things, non-catastrophe claims are rising 12 percent and the company is defending raises to overspending staff members. Some in Tallahassee, though, dislike Citizens merely because it exists. They really dislike Citizens because it’s also the state’s largest insurer. So each year, some in Tallahassee try to make Citizens less and less appealing as an option. Higher rates. Restrictions on coverage. In effect, they they try to force people out of Citizens.
This year, however, only one Citizens bill might pass, and it actually might help some. House Bill 7053 would create a “clearinghouse” for those seeking new coverage from Citizens or renewing their coverage. Applications would go to the clearinghouse, and private carriers could decide if they want to pick up the policy. To get the business, a private carrier’s price still could be no more than 15 percent above what Citizens is offering, which is the current law. Homeowners might have more chance to get out of Citizens at a realistic price, and thus escape the highest costs if Citizens had to levy what some call a “hurricane tax” — assessments — to help pay claims.
Florida Insurance Consumer Advocate Robin Westcott supports the clearinghouse as a way to encourage Floridians to seek private coverage, rather than hound them into a policy with a company that is receiving short-term incentives. HB 7053 has weaknesses, one major one being that insurance companies wouldn’t have to participate. But it beats the push by some legislators to keep pushing Citizens rates higher and higher. “There’s only so much,” Ms. Westcott said, “that consumers of our state can take.”
Other bad ideas in the Legislature are to limit Citizens coverage to $500,000 per home and make only primary residences eligible for Citizens. The current limit of $2 million has moved out of Citizens some customers who can afford private coverage. Setting that amount below $1 million, even over several years, would include too many homes — especially with property values rising again.
As for banning second homes and vacation homes from Citizens, Florida wrongly stuck it to out-of-state property owners for years with Save Our Homes. There’s no reason to kick that portion of the real estate market in the teeth. Also, some owners of second homes are year-round residents, who rent the home for income or plan to retire and move in.
Nearly 320,000 policies came out of Citizens during the last three months of 2012. Citizens officials claim that the company’s policy-reduction measures have reduced by nearly 42 percent the chance of statewide assessments after a one-in-100-year storm — the worst-case scenario. For all the complaints about Citizens, it recently was judged the most financially sound carrier in the state. Several Citizens-related bills have been filed, and a consumer-focused Florida Legislature could craft good changes to Citizens. That is not this Florida Legislature.