MANATEE — Legislators are trying to scale back the multibillion property insurance risk that Florida consumers and taxpayers face if a catastrophic hurricane were to hit the state this year.
A state Senate committee Monday approved a bill, S.B. 2036, that would allow insurers to sell policies that are exempt from state rate reviews.
Bennett said he had more than 700 complaints from consumers saying they were offered lower insurance rates than the state-run Citizens Property Insurance Corp. could give, but were unable to take advantage of them because of the state’s “goofy rate-making policy.”
He said the bill would allow consumers more choices in which companies and agents to do business with.
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“If they’d rather deal with a State Farm agent instead of one from Citizens, they should be able to,” said Bennett.
“If you were willing to pay a little more to deal with a particular agent or company, we believe that’s consumer choice,” he noted, but added, “In a lot of cases, the consumer will actually pay less in premiums.”
If Bennett’s bill becomes law, it would create two different types of personal lines of residential property insurance, according to a staff analysis of the bill.
Last week, a state House of Representatives committee approved a bill to make the state-backed Citizens a last-resort insurer.
The measure would also draw down the hurricane catastrophe fund obligations by several billion dollars.
Neither Citizens, which has about 1.1 million policies, nor the catastrophe fund have enough money to pay claims if a major hurricane or a series of damaging storms in highly populated areas hit Florida this year, officials have said.
Legislators are attempting to reposition Citizens in the market with more actuarily sound rates, said Rep. Ron Reagan, R-Bradenton, and House speaker pro tempore.
“What that means is you as a policyholder in Florida would have less exposure for assessments,” said Reagan, an insurance agent.
Currently, insurance consumers are liable to the catastrophe fund for an emergency assessment of up to 6 percent of what they pay for insurance premiums for losses arising in a single year, officials said.
Property owners also are liable for a maximum 2 percent of the premium for the Florida Insurance Guaranty Association; Citizens’ policyholders are subject to a 15 percent surcharge when a deficit is incurred, officials said.
A consumers’ group based in Tampa is supporting policies that would lower the potential for assessments in the event of a big storm and encourage smaller companies to compete for business in the state, said Bill Newton, executive director of the Florida Consumer Action Network.
“We need more smaller companies to come in and take some more of the business — provide open competition in the market, and Citizens should provide some of the competition,” he said.
“We don’t want them to be biggest insurer — I don’t think anybody does.”
The group also favors legislation that calls for a glide path for Citizens Insurance Corp. that would gradually allow its rates to rise until they reach actuarily-sound levels, said Newton.
People need to feel sure that the rates they are paying are correct and have been carefully vetted, Newton said.
“It’s still going to hurt to pay, but we’ll know we have to,” he added.
— The Associated Press contributed to this story.
Sara Kennedy, Herald reporter, can be reached at (941) 708-7908.