Posted on 29 Apr 2013 by Neilson
Florida's Senate passed legislation that would reform Citizens Property Insurance Corp., but only after accepting an amended version of the bill that scaled back provisions that likely would have caused rate increases, said Sam Miller, executive vice president of the Florida Insurance Council.
SB 1770, sponsored by Senate Banking & Insurance Committee Chairman David Simmons, moved through the Senate by a 24-15 vote. The bill now heads to the House, which is considering several bills on April 26 that contain individual components of the single Senate bill.
The version that initially was brought to the floor held a provision to keep the current 10% rate hike cap for existing business, but eliminate it for new business effective Jan. 1, 2014. But FIC reports that Simmons moved to scale-back measures that would increase Citizens' rates after facing pressure from Gov. Rick Scott's staff and legislative leaders.
The revised bill streamlines rate filing by having Citizens, the state's largest property insurer and insurer of last resort, file first and certify complaint rates. The Office of Insurance Regulation can request changes that Citizens must address, if necessary. The bill requires actuarially sound rates for new business that has not re-entered Citizens from a take-out by a private insurer during the past 18 months, an FIC summary said. The definition of "actuarially sound" is clarified to include recovery of a cost of capital for catastrophe risk, such as sponsoring bonds and reinsurance in the event of catastrophe.
The provision that would eliminate the cap on new business was among the items removed from the latest version, Miller told Best's News Service. "It was always going to be very tough to have substantial increases in Citizens' rates," he said.
Other elements of the bill would hold Citizens to bad-faith claims. It would also reduce the maximum Citizens' policy limit from $1 million to $500,000, phasing down the limit by $100,000 a year during a five-year period, the summary said. This would not apply in areas where OIR believes there is no competition for Citizens and in the Florida Keys, which the bill specifically identifies as a noncompetitive zone. Private companies that offer within 15% of Citizens' rates on new policies and 5% on renewals makes the risk ineligible for Citizens, the summary said.
The bill still contains measures to establish a clearinghouse that would ensure Citizens' coverage is available only to those eligible applications.