Homeowners have been spared from the threat of faster rate increases after the Florida Senate agreed Thursday to scale back a proposal to reform Citizens Property Insurance Corp.
In a final concession, the Florida Senate largely abandoned its aggressive campaign to hike rates at Citizens for new policyholders. Instead, the bill now being sent to Gov. Rick Scott for his signature will steer homeowners away from Citizens without boosting their rates.
After the Senate backed off from the rate increase language, the Citizens reform bill passed with a bipartisan 32-1 vote.
"We're not getting a whole loaf here, members, but we're getting a lot," said Sen. David Simmons, R-Altamonte Springs, who had originally pushed for the faster rate increases. "I can call it Citizens - light."
A spokesperson for Scott's office said the governor was reviewing the proposal.
The main reform in the scaled-back SB 1770 involves a "clearinghouse" at Citizens, a mechanism to steer policyholders into the private sector. Homeowners with Citizens who receive a comparable insurance rate from a private insurer through the clearinghouse would be forced into the private market.
Several senators from South Florida and Tampa Bay who voted against the more aggressive bill last week changed their votes and supported the new bill.
"I believe the bill we have today is a good bill," said Sen. Eleanor Sobel, D-Hollywood, who flipped her vote and supported SB 1770 Thursday. "When [Sen. Simmons] assured me today that there were no rate hikes, I was very, very happy."
The Florida House, working with the governor, played a major role in scaling back the pocketbook impact of the reform effort. House Speaker Will Weatherford, R-Wesley Chapel, said throughout the session that he preferred an "incremental," rather than drastic, plan for fixing Citizens.
When lawmakers first proposed a plan for reforming Citizens in February, it brimmed with proposals that would help the insurance industry and hit homeowners hard. It included provisions to allow Citizens to raise rates by 13 percent each year for current policyholders, uncapped rates for new policyholders and additional charges and fees for all.
One by one, as political opposition to rate increases mounted, the controversial proposals were shed from the bill. The Senate bill faced further obstacles when Citizens President Barry Gilway said publicly that it would lead to rate increases of more than 60 percent in several parts of the state.
The proposal passed the Senate last week on a 25-14 vote, but the House stepped in and sent its own plan to the Senate, stripping out the 60 percent rate increases. That bill passed the House on a 111-6 vote.
The Senate agreed to concede to the House plan, which also includes several other reforms. The proposal prohibits Citizens from covering new homes built right on the water, and reduces Citizens' maximum coverage limit to $700,000 over three years. The House and Senate plans also offer new accountability measures for Citizens. The proposals require Citizens to have an Inspector General and abide by state contracting rules, changes driven, in part, by Herald/Times stories of corporate misconduct and overspending by executives last year. The company's board - which has been accused of enacting anti-consumer proposals in recent years - would gain another member who would serve as a consumer advocate.
With more than 1.2 million policies, Citizens is the state's largest insurance company and can levy "assessments" on consumers after a major storm.
Consumer groups, who had protested the original bill, claimed victory as the scaled-back proposal was approved.
"It took a fight, but consumer advocates were able to stop the ridiculous rate hikes and keep positive reforms like the clearinghouse for policyholders," said Sean Shaw, founder of Policyholders of Florida. "These reforms do not jeopardize our housing recovery, so it's a win for both policyholders and our economy."
Business groups and private insurance companies also applauded the bill, though they had earlier hailed the more aggressive reforms. Simmons and the business lobby have argued that Citizens is a financial liability that threatens the state. If a cataclysmic storm hit Florida and Citizens ran out of cash, it would levy assessments on consumers to cover its shortfall.
"This bill is yet another step toward returning Citizens to its rightful place as Florida's insurer of last resort," said Don Brown, regional manager for Property Casualty Insurers Association of America.