Task Force urges Citizens to raise rates

01/06/09 Seán Kinane
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If you have Citizens homeowners insurance, your rates may be going up beginning next year. That was among the recommendations for changes to Citizens Property Insurance Corp. -- the state-supported insurer of last resort -- that will be made to the Florida Legislature by a committee that met today in Tampa.

Bruce Douglas, chair of the Citizens’ Mission Review Task Force, said: “I will make a motion that we recommend to the Legislature that at the Jan. 1st implementation date, that Citizens’ actuarially sound rates be implemented. Not to exceed 10 percent per year.”

The task force unanimously agreed to recommend an annual increase not to exceed 10 percent averaged statewide. No region of the state would see its average rates increase by more than 15 percent and no individual Citizens policyholder’s rates would increase more than 20 percent per year under the task force’s recommendations.

Citizens rates are currently frozen until January 2010.

Locke Burt is president of Security First Insurance Co. and is a member of the task force, which must submit a report to the governor and Legislature by the end of the month.

According to its website, the task force should recommend “changes needed to return Citizens … to its former role as a state- created, noncompetitive residual market mechanism that provides property insurance coverage to risks that are otherwise entitled but unable to obtain such coverage in the private insurance market.” Doing those things may reduce the number of Citizens’ policyholders.

Burt, who is a former Republican state senator and candidate for attorney general, did manage to get two of his suggestions added to the task force’s recommendations: “To require people to sign a piece of paper that says ‘I’ve searched the insurance market and the only company available to me is Citizens.’ So it’s simply a way to verify that people are complying with current law.”

According to task force member Belinda Miller, who is deputy insurance commissioner for Property and Casualty Insurance, “An applicant for coverage with Citizens is not eligible if they have an offer of coverage from any authorized insurer at approved rates … unless the offer they have is more than 15 percent higher than a comparable premium for Citizens.”

The task force recommended keeping that requirement. Another recommendation by the Citizens Mission Review Task Force would allow private insurers to access information about Citizens policyholders in an online database called the Florida Market Assistance Plan (FMAP).

“I think we have about 50 companies writing property insurance in the state of Florida. And they would have a better chance of giving customers a cheaper policy if they could look at the policy in Citizens.”

Private insurers are able to “take out” Citizens policyholders by offering them insurance for the same rate. Currently, people insured by Citizens have the opportunity to opt out of the take out bids by private companies, although the state’s Chief Financial Officer Alex Sink told WMNF last November that she thinks customers should not have to go through that trouble if they just want to stay insured with Citizens. One of Sink’s appointees to the task force, Kirk Ball, said consumers should have the right to stay with Citizens. “I don’t think we should remove the choice of those good folks."

Bill Stitt is with the Bouchard Insurance Agency and is not on the Task Force but asked the group to allow Citizens policyholders to keep the option of staying with Citizens. He said that many “take out” offers from private insurers are not comparable to the coverage with Citizens.

Task Force member Chip Merlin initially wanted to recommend doing away with the right of Citizens policyholders to opt out if a private company makes a take out offer. He even warned against Citizens exhibiting “socialistic paternalism.” But Merlin supported allowing opt-out after hearing that many of the private insurance policies put forward to Citizens policyholders offer inferior coverage.

The Citizens Mission Review Task Force will meet a final time on Jan. 22 in Jacksonville before submitting its recommendations to the Legislature and governor at the end of the month.

Citizens Property Insurance Corporation

CPIC Mission Review Task Force

WMNF coverage of Alex Sink on Citizens’ take out policy

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