Florida House passes Citizens insurance bill that is easier on the pocketbook

Herald/Times Tallahassee BureauApril 30, 2013 

TALLAHASSEE -- After stripping a controversial property insurance reform bill of any hint of rate increases, the Florida House voted 111-6 on more modest changes that won’t hit pocketbooks as hard as a bill passed by the Senate.

Rep. Doug Holder, R-Venice, said the House had worked with Gov. Rick Scott to come up with a proposal that would not increase rates at Citizens Property Insurance Corp. Holder said the House proposal had four main goals:

“Reducing the size and exposure of Citizens, thereby reducing risk to the state; Limiting rate and assessment shock; Increased accountability at Citizens; and needed changes for all property insurers and their consumers,” he said.

The Senate hoped to reduce the size and exposure of Citizens as well, but sought to do so by increasing rates for new policyholders, including increases of up to 100 percent in some areas. It also included controversial proposals allowing Citizens to loan out millions of dollars to private insurers and making the company’s director an appointee of Scott.

SB 1770 passed the Senate last week on a tight 25-14 vote, after two hours of testy debate. The House’s less controversial version passed Tuesday by a wide margin and with no debate.

The two chambers will have to iron out the details in the final three days of session, or the reform effort will die.

The House and Senate both agree on the main part of reform — a “clearinghouse” mechanism allowing Citizens to steer policyholders into the private sector. Homeowners with Citizens who receive a comparable insurance rate from a private insurer through the clearinghouse would be forced into the private market.

Sen. David Simmons, an Altamonte Springs Republican who pushed for the more aggressive reforms, said he stood by his bill but acknowledged the difficult politics of the issue.

Reforms enacted this year would likely hit homeowners in 2014, just as House members and Scott are up for reelection. Some Senators have four-year terms and won’t face reelection until 2016.

“I am pleased that the House has gone as far as it has,” said Simmons. “I know a win when I see it.”

Simmons pushed hard for sweeping reforms, claiming that state-run Citizens would put Florida into financial turmoil after a major hurricane. With more than 1.2 million policyholders, Citizens is the largest insurance company in Florida and can levy assessments on consumers after a cataclysmic storm.

Aside from the clearinghouse, some parts of the Senate bill made it into the House version as well. The proposal would prohibit Citizens from covering new homes built right on the water, or seaward of the coastal construction control line. The Senate bill reduces Citizens’ maximum coverage limit to $500,000 over five years; the House version reduces the limit to $700,000 over three years.

The House and Senate plans also offer new accountability measures for Citizens. The proposals require Citizens to have an Inspector General and abide by state contracting rules, changes inspired by Herald/Times reports of corporate misconduct and overspending by executives last year. The company’s board — which has been accused of enacting anti-consumer proposals in recent years — would gain another member who would serve as a consumer advocate.

Business groups — which praised the passage of the original Senate bill — were mostly silent after the House bill passed.

Christian Cámara, Florida director of free-market think tank R Street Institute, said the bill “will not stop the bleeding, but is a good start in slowing it down.”

Consumer groups, which protested the original Senate bill, celebrated the House’s more moderate version.

“Today’s overwhelming rejection of unregulated rate hikes in the House is a huge victory for policyholders and our housing recovery,” said Sean Shaw, founder of Policyholders of Florida.

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