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Citizens offers 31 proposals to reduce exposure - and coverage

The chairman of the board of Citizens Property Insurance Co., Florida's state-backed insurer, spoke to a roomful of state officials earlier this week. He brought with him 31 new proposals for steps the over-burdened insurance company can take to reduce its exposure, but he also brought the same message the company has delivered throughout the process: Not much will change without a serious overhaul of public policy.

The insurer was originally established as the insurer of last resort for Floridians in high-risk regions of the state. Changes in the insurance and reinsurance marketplace as well as changes in residential real estate have pushed more and more homeowners onto the company's rolls. Now, with 1.5 million policyholders, the company carries in excess of $500 billion in total exposure.

The majority of the steps on the company's list involve reductions in coverage. The company is not waiting to implement a handful of changes.

This month, policyholders with high-value homes will have a coverage limit of $1 million. Officials estimate the change will affect 7,500 policyholders.

One change that is no surprise to anyone is an increase in deductible for sinkhole coverage. The proposal is for a 10 percent increase and may be a nudge to lawmakers to approve rate increases next year.

Personal liability coverage will drop from $300,000 to $100,000. The company will also limit increases in loss assessment coverage. Loss assessment coverage applies only to homeowners who are part of a homeowners association; this is the part of the policy that covers a homeowner's portion of damage to a common area or liability for an accident that takes place in a common area.

We'll continue this in our next post.

Source: Insurance Journal, "Florida's Citizens Insurance Says Legislation Needed for Real Change," Michael Adams, Dec. 6, 2011

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