The state of Florida hasn’t had a direct hit from a major storm for seven consecutive seasons. But, There is a storm brewing at the Capitol over the financial viability of the state’s largest property insurer.
Citizen’s Property Insurance was originally set up to be an insurer of “last resort” for those that couldn’t find a policy with a private or commercial company. That way the state could be sure that all homeowners would be insured in the event of a major catastrophe like Hurricane Andrew in 1992. But, David Hart with the Florida Chamber of Commerce thinks the insurer of last resort has grown too big for its britches.
“Citizens was formed to be insurer of last resort for the state of Florida and unfortunately over time, it’s grown to be the biggest insurance company in our state. In fact, it’s bigger than the next three private insurers combined,” Hart said.
Citizen’s Property Insurances has more than a million policy-holders and holds about $400-billion in risk exposure. That’s why the Chamber is joining a coalition of groups in support of legislation that seeks to depopulate Citizens and raise rates. They say this will bring private insurers back to the state who they say fled because of not being able to compete with Citizens. Republican Representative Mike Fasano, of New Port Richey, agrees with depopulating Citizens but worries the measures in the House and Senate are too much too fast.
“If homeowners today can no longer afford their insurance, what about those that are wanting to buy a new home and have to come under the new rules and regulations without that cap in place? It would be economically disastrous to our real-estate industry in the state of Florida,” Fasano said.
Fasano also said the proposed measures’ provisions would kick homeowners off citizens if they could afford insurance from a private company. But, that wouldn’t guarantee they’d be able to stay on those private plans.
“You would have a homeowner that is now under the ten percent cap, is taken out by a takeout company, is now sent back to Citizens because that takeout company, for whatever reason, no longer wants that policy and now you have all of these policy-holders going back to Citizens, now under a new policy, which they would now be hit with that huge increase,” Fasano iterated.
That increase could be as much as 137% as is the case for parts of Monroe County. But, David Hart with the Florida Chamber of Commerce said the bills are nowhere close to being finalized and he doesn’t want people to suffer from sticker shock either.
“I do think there is an importance as state that we be fair to consumers that are already relying on Citizens but, you know, not give them rate shock so to speak. But, we absolutely as a state ought to be moving towards rates that are actuarially sound,” Hart reasoned.
Both the House and Senate measures will be debated this week and could come up for a vote by Friday.