Consumer groups protest Citizens’ Insurance legislation
Published: Monday, April 15, 2013 at 7:23 p.m.
Last Modified: Monday, April 15, 2013 at 7:23 p.m.
TALLAHASSEE — Consumer groups gathered inside the state Capitol on Monday seeking to oppose property insurance legislation that could lead to substantial rate increases.
The bill is up for a final vote today in the Senate after moving quickly through the committee process with little opposition.
Sean Shaw, the state's former insurance consumer advocate, called it "surprising" that the legislation "has flown through with such little resistance."
The wide-ranging bill "would be very tough for consumers to bear," Shaw said after a news conference organized by a group of consumer watchdogs in the Capitol rotunda.
The event was akin to a Hail Mary pass by groups opposed to the legislation, which is expected to pass the Senate.
Jay Neal with the Florida Association for Insurance Reform said consumer advocates tried to work within the process and not "throw bombs," but "we think the final product is very damaging and unnecessary."
Neal said the "worst" aspect of the bill is that it raises rates substantially for new customers of Citizens Property Insurance.
Neal said the current 10 percent cap on annual rate increases at Citizens has been successful in moving the company towards rates that are on par with private insurers. There is no reason to "create two tiers" of rates at the state-run insurer, he said.
"We feel that would be extremely damaging to the real estate market," Neal said.
Raising rates for new Citizens policies could also prompt private insurers to raise rates. Citizens helps hold down rates in the private market because it is the greatest competition private insurers face in many coastal markets.
Citizens' rates in Sarasota County could increase by 37 percent for certain policies in some areas and 27 percent in Manatee County. There are 90,000 current Citizens policyholders in the two counties.
David Hart, executive vice president with the Florida Chamber of Commerce, said Monday that Citizens' current rate structure is "an unsustainable model" and urged lawmakers to pass the bill.
Hart and other supporters of the legislation note that Citizens can levy assessments against insurance policies statewide — including homeowners and auto policies written by private insurers — to pay claims if the company runs short of cash after a major hurricane.
"There's no place on earth where that's a fair model," said Hart, who attended the news conference Monday to rebut the speakers.
Yet assessments also are levied to pay claims when private insurers fail, and with $6 billion in reserves Citizens can withstand all but the most catastrophic storm without resorting to so-called "hurricane taxes."
Rep. Mike Fasano, R-New Port Richey, said lawmakers are over-hyping the risk of assessments to sell the legislation.
The greater risk is to the real estate market, he said.
"It would be economically disastrous to our real estate industry in the state of Florida," Fasano said.
The House has not advanced a comprehensive property insurance reform package this year, but Fasano said Monday he expects House leaders to take up the Senate bill if it passes or try to amend other legislation to incorporate some of the Senate provisions.