dim for across-the-board
cut in home insurance rates
Article Courtesy of The Sun Sentinel
Hollis and Linda Kleindienst
Published January 19, 2007
TALLAHASSEE · Whether to
expand Citizens Property Insurance Corp. and also guarantee its
policyholders a major rate reduction was the major sticking point Thursday
as Florida lawmakers eased into final negotiations on measures to stop the
state's insurance crisis.
The keenest debate as the Florida Legislature's special session moved into
its decisive days was over a plan to freeze Citizens rates at the Dec. 31,
2006 level for all of 2007.
The proposal delivers at least 25 percent savings for Citizens customers
living in "high risk'' zones east of Interstate 95 in South Florida.
But other Citizens customers -- mainly those west of I-95 -- might see a
rate cut only half that size.
Gov. Charlie Crist was pushing for a minimum guarantee of a 25 percent
drop in the premiums of all Citizens' 1.3 million policyholders, in
addition to similar savings for Florida homeowners covered by private
"I must sound like a broken record but that's the thing I'm most
concerned about, that we have broad, sweeping lower rates," Crist
said Thursday. "However we get there, I just want lower rates for the
But some high-ranking legislators questioned whether such savings were
possible under the bills being considered in the House and Senate that
would rescind two separate price hikes by Citizens.
"The governor is saying he wants 25 percent across the board [rate
cuts for every Florida homeowner] and my assumption is he wants that for
Citizens, too,'' Rep. Ellyn Bogdanoff, R-Fort Lauderdale, said. "We'd
have do more than we currently have on the table to accomplish that.''
Slashing Citizens prices, according to some legislators and lobbyists for
private insurance companies, could leave the state-run insurer dangerously
underfunded if another hurricane were to slam into Florida. Lowering
prices now, they warned, would only make a far bigger rate increase
necessary in 2008.
"It would be like holding our breath for a year,'' said House
Democratic Leader Dan Gelber of Miami Beach. "It's very dicey
Besides balking at guaranteeing savings for Citizens customers on the
scale sought by Crist, Republican and Democratic leaders in the state
House of Representatives were fretting over proposals that would likely
swell the ranks of homeowners covered by the state-run insurer.
Such expansion would almost certainly result from those Senate plans,
supported by Crist, that would revoke a current legal requirement that
Citizens rates be higher than the premiums charged by the state's top 20
private insurers. The new plans would allow Citizens to sell more types of
coverage in high-risk zones, including areas in South Florida near the
ocean. Currently, Floridians there can only buy insurance from Citizens
for windstorm damage, and must go to private insurers for policies against
fire and theft.
"The more we make Citizens competitive, the more we give them an
opportunity to have lower rates, not be the insurer of last resort or the
one with the highest rates, to be more competitive, to offer other types
of insurance…the better off it's going to be for the people,'' Crist
State Sen. Jeff Atwater, R-North Palm Beach, said Citizens officials had
told him that if they sell "multi-peril'' policies, they can drop
premiums in South Florida by 20 to 29 percent.
But Sam Miller, executive vice president of the Florida Insurance Council,
an industry trade group, objected that the changes would spell lower
earnings and profits for private insurers, making the Florida market even
less attractive for the companies he represents.
Many Florida House members, including House Speaker Marco Rubio, R-West
Miami, and Rep. Jack Seiler, D-Wilton Manors, said they think the idea of
allowing Citizens to sell more policies ought to be further studied and
considered during the regular legislative session that begins in March.