The idea that Citizens Property Insurance Corp. really would be a state-run insurer of last resort that would go out of business as private insurers came back to the Florida market seems hopelessly naive now. The reality is that it has become the state's largest insurer, and in parts of Tampa Bay and other areas it is virtually the only insurer writing coverage. That's why legislators have little choice during this week's special session but to make Citizens run more like a private insurer.
Citizens has more than 1.3-million of the riskiest policies that private insurers won't touch, including some 400,000 coastal policies that cover only wind damage. It doesn't make sense to let private insurers that won't cover wind to reap the profits from just providing lucrative fire and theft coverage. The industry doesn't like it, but lawmakers should allow Citizens to convert those wind-only policies into full coverage to bring in more revenue as the Senate proposes. For that to work well, though, Citizens is going to have to continue to improve its customer service even if that means adding more employees.
Forcing Citizens to charge rates equal to the highest rates charged by the largest insurers so it won't be competitive also isn't logical anymore. There isn't any competition in too many neighborhoods, and homeowners who can't shop around shouldn't be forced to pay artificially high rates. Both the House and Senate plan to abolish the requirement that Citizens charge the highest rates, a change that would have been unthinkable even a year ago.
Of course, the headline for homeowners and lawmakers is all about lowering rates. Gov. Charlie Crist and state legislators can't move fast enough to repeal a March 1 rate increase that would be 55 percent for windstorm-only Citizens policyholders. That rate increase was based on flawed logic by last year's Legislature, which wanted Citizens to set rates as though it buys expensive reinsurance when it doesn't. But the governor and the Legislature also are determined to repeal an average 25 percent rate increase that took effect Jan. 1 and is supposed to keep Citizens' rates financially sound. That seems short-sighted and destined to increase the likelihood of assessments after a hurricane. But we will accept the conclusion by Steve Burgess, the state's insurance consumer advocate, that Citizens' rates would have remained sound with a smaller, single-digit rate increase.
As always, there is a certain amount of grandstanding. The governor would change Citizens' name. The House would oust its board of directors. All of that seems unnecessary. The goal this week should be to bring some rate stability to homeowners stuck in Citizens and to enable the insurer to operate more like a private company. Like it or not, the state is in the insurance business and needs to act like it.