Citizens insurance rates spark North vs. South battle
Twenty-five Florida lawmakers are supporting a move by the state-backed Citizens Property Insurance Co., to reduce its size. But it’s turned into something of a North versus South battle.
Citizens Property insurance—once created to be an insurer of last resort—has now become the state’s largest insurer with more than 1.5 million policies. Citizens has blown up in size for a number of reasons, such as its rates being artificially low, making competition from private insurers unlikely. So Governor Rick Scott has asked Citizens officials to start looking for ways to reduce its size. One idea is to increase rates for new policy holders above a 10-percent cap put in place by lawmakers in 2009. But it’s a move some say violates the intention of the law.
“We have done the research and we have checked the legislative intent of the law,” said Interim Citizens Prsident Tom Grady, who insists the move is legal. Citizens interim President Tom Grady insists it’s legal.
And he's got support from several state lawmakers, ready to defend him.
“If you really want to talk about what’s fair, don’t talk about the artificially low rates for the 1.8 million people on Citizens. Talk about the 17 million people who aren’t on Citizens and what’s fair to them,” said Representative Ritch Workman, R-Melbourne. He says the way the statute is written lets Citizens increase current policies by 10-percent each year, but doesn’t make any rules against charging new customers the real cost of their policies. And Workman said he thinks that’s fair.
Right now, people with Citizens policies don’t pay the actuarial rate, or real cost. That means if a major storm hits all Floridians with insurance policies, like auto insurance, could be on the hook to cover the cost of any claims filed. Workman is one of the lawmakers who sent a letter to Grady supporting the insurer’s efforts to increase rates for new policy holders. He joined several other lawmakers from North and Central Florida. Meanwhile lawmakers from the Miami area are saying they’re prepared to file legislation next session against the move, if Citizens makes the increases in their area.