A wide-ranging effort to revamp and downsize Citizens Property Insurance will require quick negotiations between the House and Senate before the end of the session on Friday.
The House on Tuesday approved an overhaul proposal for the future of Citizens, after replacing the language in the bill (SB 1770) with the language from a House bill (HB 909). Rep. Doug Holder said the intent of the House proposal is to maintain existing rates and “to modify Citizens Property Insurance eligibility, create an inspector general, and create a clearinghouse.”
The sponsor of the Senate effort, Sen. David Simmons said earlier this week that if the only part of the bill approved is the clearinghouse – expected to push more than 200,000 of Citizens’ 1.27 million policies into private hands – the measure should be considered a success this session. “If we have the clearinghouse, if that were all that we had, we would be in a win situation,” Simmons said. “There exist over 200,000 policies that should never be in Citizens, that were – as far as I’m concerned – dumped into Citizens. And those are people who are paying higher rates than they otherwise would if they were given the opportunity to find a private insurance company.”
But the proposals offer more than just the clearinghouse, which along with the inspector general position, has the support of Gov. Rick Scott.
Both bills include a prohibition on coverage for new structures seaward of the coastal construction control line, and a requirement that policy holders sign a statement that acknowledges an understanding of their liability risk. Meanwhile, the House proposal doesn’t include 36 provisions that were in the Senate package.
Among the differences: lifting of Citizens’ exemption from bad faith litigation; requiring all non-residential policies to be actuarially sound; reintroducing coverage for screened enclosures and carports on mobile homes with a minimum insured value of $3,000; requiring members of the Citizens board of governors to be confirmed by the Senate; and changing Citizens’ president from a board of governors’ appointment into an executive director position selected by the governor and chief financial officer. Also, the Senate measure would have allowed surplus line carriers – companies that are not required to have their rates approved by the Florida Office of Insurance Regulation – to participate in the clearinghouse. The House proposal also doesn’t automatically move new customers buying a Citizens’ covered property into rates that are considered more actuarially sound.
Sean Shaw, founder of Policyholders of Florida, favored the House language. “Today’s overwhelming rejection of unregulated rate hikes in the House is a huge victory for policyholders and our housing recovery,” Shaw stated in a release. “We hope that the Senate received the message loud and clear – jacking up rates on homeowners isn’t the way to fix our property insurance market.”
Also, the Senate bill reduces the maximum value of property that could be covered from $1 million to $500,000 by 2019, while the House is proposing the cap be lowered to $700,000 by 2017.
Via the News Service of Florida.