Citizens to freeze rates, can now spread risk upstate

South Florida consumers covered by the state-run insurer will see their premium rates frozen for one more year as a result of a bill passed by the state Legislature.

Article Courtesy of The Miami Herald

Published  May 5, 2007


The Legislature handed South Florida homeowners who buy coverage from Citizens Property Insurance a gift: no rate increase before 2009.

The rate freeze was part of a large insurance bill approved by lawmakers on the final day of the Legislature's regular session.

A key provision among the more than 70 in this bill is the expansion of Citizens' operations. No longer is the state-run company the insurer of last resort. It now can compete with private insurers in Florida.

''The focus is to change the mission of Citizens to allow it to become profitable so those profits can be used in lieu of higher assessments,'' said Sen. Rudy Garcia, a Hialeah Republican who sponsored the bill in the Senate.

The measure had the backing of Gov. Charlie Crist, who sees a more competitive Citizens as a vehicle to lower rates. He's hoping private insurers might tweak their rates down to keep from losing business to Citizens.

''We put a nail in the coffin of the industry that was choking our people,'' Crist said after lawmakers wrapped up their work Friday afternoon.

Several House members vehemently opposed this insurance bill because Citizens can assess nearly all insurance policies in the state. Surcharges could be tacked onto auto and homeowner policies that aren't with Citizens to make up deficits faced by the state-run insurer.

''Floridians have a right to live anywhere they choose, but they don't have a right to expect everyone else to fund their choice,'' said Rep. Don Brown, R-DeFuniak Springs, head of the House Insurance Committee.

Several representatives from North and Central Florida noted that Citizens' policies are concentrated in coastal areas yet their constituents would be assessed. Indeed, half of Citizens' 1.3 million policies are in South Florida.

But Citizens says its recent growth has been upstate because private insurers are writing far fewer policies. Insurers contend they're losing customers because rates at Citizens are lower.

Rep. Dennis Ross, R-Lakeland, made one last attempt to require that only Citizens policyholders make up the company's deficits.

But at the end of the day, the House approved the bill with a 106-to-10 vote.

''Leadership was telling us to vote our conscience,'' said Rep. Julio Robaina of Miami, who sponsored the bill in the House.