Two weeks ago, Florida’s governor asked the board of Citizens Property Insurance Company to get its house in order. Concerned that the state’s insurer of last resort would not be able to meet the financial demands of a major storm, the governor chastised Citizens’ management team for allowing the company to become so large without safeguarding its financial stability.
Yesterday, the board came back with a few ideas — and laid them squarely at the feet of the Legislature. Even the chairman of Citizens’ board concedes that the list of proposals will be a hard sell during a difficult election year.
Citizens is asking lawmakers to take up a number of provisions from a bill that didn’t make it out of the last session. If the insurer can find a sponsor, the 2012 session will likely see a repeat of this year’s heated debates.
Once again, the insurer is asking the state to remove the 10 percent limit on annual rate increases. The company contends that they cannot build up the reserve the governor wants without a rate hike. In the same vein, Citizens asks that lawmakers approve another change to sinkhole coverage. Specifically, the insurer asks that homeowners share the expense of a claim by paying a 10 percent deductible.
Citizens also asks that the threshold for eligibility be raised. The change would reduce the number of policyholders and allow the company to shrink.
As the insurer of last resort, Citizens is currently required to cover any homeowner whose private insurer would charge 15 percent more than Citizens. The proposal would increase the rate difference to 25 percent.
Critics say the plan won’t work. We’ll discuss why in our next post.
Source: PropertyCasualty360.com, “Florida Last-Resort Insurer Takes List of Changes to Lawmakers,” Gary Fineout (AP), Nov. 15, 201