We are still reviewing the provisions of Senate Bill 7018, one of the Citizens Property Insurance Corp. reform proposals being considered by the Florida Legislature. In our last two posts, we discussed how the bill would change the rating structure and how it would limit eligibility for more expensive homes over the next few years.
The bill also takes aim at Florida’s snow birds, the out-of-state residents who own vacation homes in the Sunshine State. Citizens’ records show almost 200,000 policyholders with mailing addresses in other states and other countries. These policyholders, the bill’s author claims, are being subsidized by tax dollars from Florida’s full-time residents.
While the Senate Banking and Insurance subcommittee considered cutting non-Floridian policyholders off completely, the bill submitted to the full Senate does not go that far. Instead, the proposal works with a combination of approaches taken to rate reform and luxury home eligibility: Non-homestead, as well as non-rental properties, that are valued above $300,000 would pay rates based on the highest rate offered by the top 20 private insurers in the territory; if no private insurers are writing, the rates would be determined based on “actuarially sound” methodology.
Homes that are rented for 12 months would not be subject to the new rules. These homes would remain in Citizens’ existing rate scheme with rate increases limited to 10 percent or less each year.
Of the 200,000 or so policies in question, though, the new plan would affect about 30,000. In turn, those 30,000 policies only add up to 3.1 percent of Citizens’ market share. For the subcommittee chair, the question is more about the principle of the thing than the bottom-line impact. Florida residents should not bear the liability for out-of-state or non-U.S. property owners, he explained.
We’ll wrap this up in our next post.
Source: Insurance Journal, “Florida Senate Bill Would Depopulate Citizens, Raise Rates, Create Clearinghouse,” Michael Adams, March 13, 2013
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