Lawmakers continue to say that their road to depopulating Citizens Property Insurance Corp. is paved with good intentions. The Florida Legislature is considering a number of bills that would move policyholders out of the state-backed insurer and into the private market. We have been reviewing the provisions included in Senate Bill 7018, including its revamped rating scheme, its step-down plans for limiting the value of eligible homes and its approach to clearing out-of-state homeowners from Citizens' rolls.
The bill also includes a more radical approach to moving policyholders to private insurance companies. Under the proposal, Citizens would be allowed to lend money from its surplus to a private insurance company as an incentive for the private insurer to take over some of Citizens' policies. The details of how the loan program would work would be left up to Citizens; it is unclear from the bill whether the state will be subsidizing private insurers' rates to make them more attractive to Florida property owners or whether the state would simply hand over the cash and the policies regardless of the wishes of the policyholders.
While the Senate has lumped most of its reforms into one bill, the House of Representatives has a few Citizens-related bills in the pipeline. The Regulatory Affairs Committee is reviewing House Bill 835, which differs from the Senate bill in its approach to rating. The House prefers that policyholders not be allowed to renew with Citizens if a private insurer's rate is only 5 percent higher than Citizens'. The bill does include a proposal similar to the Senate bill's that would limit eligibility for more expensive homes.
Both houses are also considering a proposal that would create a clearinghouse within Citizens that should ostensibly help applicants and renewing policyholders find coverage with private insurers. The clearinghouse would allow private insurers and their agents to provide rates to applicants before Citizens determines they are eligible.
Both supporters and opponents of the various proposals say that none of the bills will look the same when, or if, they make it to the governor's desk.
Source: Insurance Journal, "Florida Senate Bill Would Depopulate Citizens, Raise Rates, Create Clearinghouse," Michael Adams, March 13, 2013
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