Bill gives Citizens leg up in market


Article Courtesy of The Palm Beach Post

By Deana Poole
Published  April 13, 2007

 

TALLAHASSEE Policyholders of Citizens Property Insurance Corp. wouldn't face an insurance rate hike until January 2009 under a bill approved 12-2 by a House council Thursday.

The bill also would allow more Florida homeowners to be covered by Citizens, the state's insurer of last resort. In that respect, it is the same as a version pending in the Senate.

Gov. Charlie Crist, who attended the meeting of the House Jobs and Entrepreneurship Council, praised lawmakers for supporting the bill (HB 1267), which he said would make the state-run insurance company more competitive, and in turn, lower the cost of property insurance for everyone.

But critics say it will only increase property insurance bills for those who aren't covered by Citizens, the state's biggest homeowners insurer, with more than 1.3 million policies.

"This bill puts us deeper in debt," said Rep. Donald Brown, R-DeFuniak Springs, who was one of two Republicans who voted against the bill. "The governor wants to help the people of Florida. I can tell you, what will help the people of Florida is to vote this bill down."

Asked later about critics' assertion that the bill was unfair, Crist said, "What's unfair are the insurance rates that people have to pay in our state today."

Rep. Julio Robaina, R-Miami, who sponsored the bill, said it was time for lawmakers to "do the right thing."

"These are the things that we should have done in the special session."

The bill would prohibit insurers headquartered outside of Florida from setting up subsidiaries - called pups - in the state because the pup companies run out of resources quicker than their parent corporations.

If the bill passes, 27 insurers could be affected, including State Farm's Florida subsidiary, which covers about 1 million homeowners.

The bill also would expand the pool of homeowners eligible for coverage by Citizens.

If the rate offered by a commercial insurer is at least 15 percent more than Citizens' rate, a client in the high-risk area could switch from that insurer to Citizens.

Under current law, the rate offered by a commercial insurer now must be at least 25 percent higher than Citizens' rate

Representatives of State Farm and the Property Casualty Insurers Association of America spoke against the bill.

But Crist, at another event, continued to tout the ability of Citizens to pick up customers whom private insurance companies are leaving without coverage.

In response to a question about the USAA Group dropping customers, Crist said, "It's a fine company, and I would encourage them to continue to cover our veterans. But if they don't, Citizens gets stronger every day, and it did again this morning. So that's the good news."

USAA announced Wednesday that it will significantly restrict new policies in the state and not renew policies of 27,000 customers who have two residences in Florida.

The fourth-largest homeowner insurer, USAA cited the state's "untenable" regulatory environment for its decision.


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