Posted on 05 Jun 2012 by Neilson
Florida state-backed Citizens Property Insurance Corp. should consider offering only windstorm coverage and leave property insurance for fire, theft and other perils to private insurers, a lawmaker proposed Friday.
Sen. Mike Fasano, R-New Port Richey, spoke at a meeting in Tampa where state officials gathered ideas to help Citizens cut some of its nearly 1.5 million policies statewide. Gov. Rick Scott has ordered the state's largest insurer to cut its risk by cutting policies.
After the meeting, Fasano said creation of the windstorm insurance pool is just an idea.
I don't know if it's a viable avenue, but I know we can't keep going in the direction that Citizens is taking us," Fasano said.
Citizens, the state's largest property insurer, has been reducing coverage and raising rates as a result of the governor's directive.
All policyholders in the state could be charged up to 6 percent of their annual premiums if Citizens lacks money to pay claims after a storm. Citizens' policyholders could pay the most — up to 45 percent of their premiums in a surcharge.
One change Citizens directors have considered: eliminating a 10 percent cap on rate increases for new customers starting Jan. 1. Fasano and consumer advocates have blasted the proposal, which could go before the Citizens board this summer.
Citizens is the only option for many homeowners. Some private companies don't do business in Florida because the rates the state allows them to charge are too low for the risks they have to assume, Fasano has said.
But insurance agents, industry executives and others urged Citizens on Friday to pull out of areas of the state where private coverage is readily available.
In recent years, Citizens' rates have been lower than those of private carriers.
"Maybe it's time for a little tough love," said Dulce Suarez-Resnick, marketing director for the Latin American Association of Insurance Agents.
Another idea proposed Friday was allowing less-regulated insurers — so-called surplus lines — to take over some Citizens policies. Florida lawmakers rejected that proposal earlier this year.
Private insurance companies don't like the regulations they face when soliciting customers from Citizens. Lisa Miller, a consultant for insurers, said insurers are "hamstrung" by the wording required in the letters sent to prospective customers.
The private insurers should be allowed to write their own letters that would give homeowners a better understanding of the coverage they're offering, Miller said.
"We would like for companies to use their creativity," she said.
Citizens staff members will compile recommendations from the meeting and present a report to officials in July, spokeswoman Christine Asburn said in an email.