TALLAHASSEE- — Momentum is gaining for the repeal of a law requiring Citizens Property Insurance Corp. to raise its windstorm rates significantly again on March 1.
Sen. Jeff Atwater, R-North Palm Beach, said Tuesday he will introduce legislation at the special session in January that would reverse the rate hike approved on the last day the 2006 legislature. A lawmaker from Pasco County is willing to co-sponsor the bill, said Atwater, who said he has the support of several other lawmakers.
"The rate increase is unacceptable," said Atwater, adding that many of his constituents can't afford the higher rates.
Many senators were not aware when they approved new financial requirements for Citizens last spring that a major rate hike would be the result, he said. Citizens, the state-sponsored "insurer of last resort," has grown into the largest property insurance carrier in the state as other insurance providers have left.
News that the increase may be reversed offers hope not only to coastal homeowners in Palm Beach and St. Lucie counties, who can expect an increase of as much as 55 percent if the law stays in place, but also to thousands of policyholders throughout the state.
Atwater's announcement came as House members met in Tallahassee for a three-day conference on insurance. They heard from Alex Sink, the state's chief financial officer-elect, who also called for the repeal of the March 1 hike in a speech before House members Tuesday.
Sink, a Democrat, said another increase for policyholders of Citizens would cause severe economic pain for many Floridians.
Several Democrats called for insurance reform shortly after the new law was approved. But what makes the most recent developments particularly noteworthy is that more Republicans are supporting the changes.
The March 1 rate hike comes on top of an already approved Citizens rate increase that goes into effect Jan. 1 for windstorm customers east of I-95 in South Florida. That hike will increase premiums by 29 percent in Palm Beach County and 17 percent in St. Lucie County.
The cumulative effect of that March hike would be more than 100 percent for Palm Beach policyholders and more than 80 percent for those in St. Lucie.
Also Tuesday, Atwater wrote a letter to Bruce Douglas, chairman of the Citizens board of directors, asking that it table its vote scheduled for Thursday.
Douglas said Tuesday night, however, that the Citizens board is required under the law to approve the March 1 rate hike. "We have to follow the law," he said. The legislation required Citizens to meet new capital requirements, setting the premium increase in motion.
In late November, Douglas called on the legislature to repeal the March 1 hike. He argued that a special session was needed because waiting until the regular session, which starts in March, would have been too late for Citizens policyholders.
Atwater said Mike Fasano, R-New Port Richey, agreed to sponsor the bill with him. And Senate President Ken Pruitt, R-Port St. Lucie, also is sympathetic, he said.
Moreover, Gov.-elect Charlie Christ has been particularly vocal about the issue. He weighed in again on Tuesday, saying, "I'm encouraged that the legislature is focused on it, too."
"You know, they all ran in these elections as well, just like I did, and they obviously got that message," said Crist, a Republican. I'm very pleased that they're debating it and considering it."
The kind of rate increase that is in the works "scares the daylights out of people," Crist said.
The legislature hurriedly passed new requirements for Citizens on the last day of the legislative session last spring. It mandated that Citizens be able to pay claims for a 70-year storm — by March 1 — without having to assess customers of private-market insurers. The legislation also called for Citizens to be able to withstand a 100-year storm by 2009, which would force additional rate increases.
The new requirements include charging Citizens customers for reinsurance - insurance for insurance companies — to help Citizens meet the new requirements. The estimated cost of reinsurance in 2007 is about $775 million.
Citizens ran up more than $2 billion in deficits after the 2004 and 2005 hurricane seasons. Those deficits are being paid by insurance policyholders throughout Florida for the next decade through surcharges on their insurance bills.
Last spring's legislation was pushed by Rep. Don Brown, R-DeFuniak Springs, one of two House members appointed by Gov. Jeb Bush to the Governor's Property and Casualty Insurance Reform Committee.
Brown, an insurance agent, said Tuesday he welcomed debate on the issue but still had concerns. "If you repeal those changes, you are, in fact, significantly increasing the likelihood of an assessment that would be passed on to everybody for the benefit of Citizens policy holders."
But Minority Leader Dan Gelber, D-Miami Beach, said repealing a rate increase would not mean passing the cost on to other taxpayers.
"It just means it's not going to be a nonsensical increase," he said.