Article Courtesy of The Palm Beach Post
By Charles Elmore
Published May 2, 2013
A clearinghouse to shrink state-run insurer Citizens is fine, but substantial rate increases for new customers are not, the Florida House made clear Monday in rewriting a Senate bill with its own version.
That gives the Senate a choice to go along or continue haggling as the session’s final week begins.
If the House passes it on third reading, and the Senate concurs, SB 1770 won’t increase rates for new Citizens customers up to 85 percent in Palm Beach County, for example.
“I’m proud of the House that we stopped the bad anti-consumer bill that came from the Senate,” said Rep. Mike Fasano, R-New Port Richey.
Fasano said he is confident the House will not negotiate away rate increases beyond the 10 percent a year already allowed by state law for Citizens customers.
“It has no rate increases,” Rep. Doug Holder, R-Venice, assured members on the floor about the House’s latest plan.
David Simmons, the insurance committee chairman and architect of the Senate plan, had no immediate comment. At least one Democrat in the chamber says he does not expect the Senate leadership simply to accept the House version.
But Fasano said no bill at all would also be fine.
“If nothing happens, it’s a win for the ratepayer,” Fasano said.
Citizens president Barry Gilway thinks the clearinghouse is worth doing to help trim the state’s largest insurer with 1.3 million customers and 130,000 in Palm Beach County. The concept: Keep out perhaps 30 percent of its new customers, who may be sent there by agents with ties to only one or a few insurers.
State Farm, for instance, is writing little new property coverage in the state, but its large agent network, wanting to keep auto and other business, may place customers in Citizens to avoid losing business to other agents.
If it works as advertised, a clearinghouse would automatically make a homeowner ineligible for Citizens if a private insurer is offering coverage at the same or a lower price.
The House version spells out that customers in the clearinghouse will not be forced out of Citizens to go with “surplus lines” insurers, speciality carriers such as Lloyd’s of London that could raise rates at will, without any say from state regulators.
Among other differences, the House reduces the maximum coverage for Citizens proprieties from $1 million to $700,000 over several years. The Senate reduces it to $500,000.
The House bill creates a new inspector general at Citizens and adds a ninth board member, a consumer advocate to be appointed by the governor. It doesn’t allow the governor and state’s chief financial officer to directly appoint the Citizens executive director, as the Senate version does.
Not faring well in either chamber at the moment: Attempts to shrink the state’s Cat Fund, which could raise consumer rates statewide by reducing a low-cost form of reinsurance from the state.