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Citizens bill goes to governor; no overhaul but 'stops the bleeding'

The Florida Legislature has sent a less ambitious insurance bill to Gov. Rick Scott than some lawmakers had hoped. The bill does not offer a complete overhaul of Citizens Property Insurance Corp.; rather, it represents a more incremental approach to reform that seemed to go over better with legislators concerned, in particular, about raising rates.

We discussed the original proposal in March. The heart of that version of the bill was the rate change. The bill would have moved Citizens away from the glide path and into a more "actuarially sound" rating system. The glide path limits rate hikes to 10 percent annually, and critics cite the cap as one of the main reasons Citizens is not competitive with private insurers.

The problem for opponents of the bill -- and the president of Citizens -- was that the "actuarially sound" scheme would hike homeowners insurance premiums by anywhere from 13 percent to 60 percent, depending on who was doing the analysis and, of course, the location location location of the policyholder's property.

So the mammoth rate hikes are out, but one major innovation from the first version of the bill survived: the clearinghouse. The clearinghouse will connect policyholders with private insurers in what is meant to be a one-stop rate shopping forum.

Initially, the bill required policyholders receiving a quote within 15 percent of their Citizens rate to go to the private insurer. That changed in the bill that passed. Now, if the private insurer offers a rate at or below the policyholder's Citizens rate, the policyholder must go with the private company, assuming, of course, that the coverage is comparable.

We'll continue this in our next post.

Source: Miami Herald, "Citizens Property reform bill - minus big rate increases - heads to governor’s desk," Toluse Olorunnipa, May 2, 2013