Click to Call and Quote Them All
Click to Call and Quote Them All
Florida’s Largest Homeowners Insurance Company Agrees To Regulatory Changes

Florida’s Largest Homeowners Insurance Company Agrees To Regulatory Changes

Thursday’s Post 11/24/11 - Citizens Property Insurance, the largest property insurance provider in Florida, presents challenges to the state due to its sheer size and accessibility to consumers. This was demonstrated when the Citizens board of governors agreed on implementing far-reaching changes to insurance regulations. The Citizens board is pushing for change via the state legislators with advice from Florida’s governor Rick Scott, who had recently aired his concerns about the insurance provider. Citizens Property Insurance may be disadvantaged at pushing for the changes due to the controversial election year, but may succeed due to the Governor’s backing. The insurance provider has close to 1.5 million policy holders, homeowners included, and Governor Scott, as well as other legislators, would prefer a reduction in these numbers. This is due to the risk of Citizens encountering major losses should a hurricane or other natural disaster hit the state of Florida.  Citizens is also state created and state-run, which also implies that in the case of losses, the insurer has the power to surcharge almost every insurance bill on Florida. This is not the case for private insurance companies, and it proves a threat in the face of natural disasters, as well as financial difficulties for the overall insurance industry in the state.

Citizens chairman of the board, and former Miami legislator Carlos Lacasa, acknowledged that it is time for the insurer to cut in its size, and that “there is political pressure for us to contract”. Lacasa also alluded to a previous controversial insurance bill, asking legislators to reconsider it given the current state of affairs. The bill would allow Citizens Property Insurance to raise its rates by more than 10% every year as a way of both raising enough financial security and reducing the number of policyholders with the insurer. Should this bill be passed, it would mean that homeowners would not be eligible for Citizens insurance unless private insurance companies offer their rates at 25% or higher. The current law states that homeowners are eligible for Citizens if alternative policy rates are 15% higher, which has proved a contributing factor in the rise of policyholders with Citizens.

The insurer also has changes that could be carried out without the approval of Florida legislators, including the controversial sinkhole coverage, among others. The insurer seeks to increase the deductibles on sinkhole coverage, with one proposed change being that the homeowner pay at least 10% of the cost before the sinkhole insurance coverage is allocated. The changes are already receiving mixed reactions from legislators, with the New Port Richey Senator Mike Fasano saying that the proposed changes would not cut the number of policyholders as private insurers already avoid covering sinkhole affected areas such as Tampa Bay. He alluded strongly to the hypocrisy of private insurers, saying that the residents of “Tampa Bay area would love to have a choice” but they have none. On the other hand some Citizens board members including John Rollins, also an insurance actuary, asserted that statewide statistics show more insurance providers adding policies, not only in Tampa Bay.

-Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602