With more than 850,000 policies, the state-backed Citizens Property Insurance Corp. has become an 800-pound gorilla in Florida’s troubled insurance market.
But you wouldn’t have known that as lawmakers passed bills during a special legislative session last week to try to shore up the industry.
Lawmakers did not make changes designed specifically to address issues such as Citizens’ growth and premiums, though parts of the overall legislation will affect Citizens as it does other insurers.
Sen. Jeff Brandes, a St. Petersburg Republican who is one of the Legislature’s most hawkish members on bolstering the private industry, said during a meeting last week that lawmakers were not doing anything to deal with the “radical growth” of Citizens.
Citizens was created as an insurer of last resort but has ballooned as private companies have shed policies and raised rates to deal with financial losses. As an illustration, Citizens had 851,006 policies on April 30, up from 453,911 policies two years earlier.
Many leaders have long sought to shrink Citizens because of concerns about policyholders across the state – including those who are not Citizens customers – potentially being on the hook to help pay claims if Florida gets hit with a major hurricane or multiple hurricanes.
“The simple truth is if Citizens was a regular insurance company, we would never have let it grow as fast as it did,” Brandes said.
But Citizens is a politically sensitive issue, as many homeowners in areas such as heavily populated South Florida have few other choices for coverage.
Citizens President and CEO Barry Gilway in recent months has repeatedly said that Citizens charges less for coverage than private insurers, at least in part because of a state law that caps Citizens’ annual rate increases. This year that cap is 11%, and Citizens has asked the state Office of Insurance Regulation to approve a rate hike of nearly that amount.
Other proposals to raise Citizens’ rates and push homeowners toward the private market have run into opposition in the legislature.
As an example, during this year’s regular legislative session, lawmakers considered ways to address situations in which homeowners receive coverage offers from private insurers.
Under a Senate proposal, such customers would not have been eligible for renewal with Citizens unless the private insurers’ premiums were more than 20% higher than what Citizens would charge. A House proposal also included a 20% threshold, though it would have been phased in and wouldn’t have fully taken effect until 2027.
In the end, the House and Senate could not reach agreement on a property insurance bill that would have included the Citizens issue. But it was clear that at least some lawmakers were reluctant to make Citizens-related changes that could lead to higher premiums for their constituents.
“It’s already through the roof now,” Rep. Matt Willhite, D-Wellington, said during a March debate. “Now you’re going to go tell them they could pay up to 20% more? Now, [the House proposal] is over a period of years, I get that. It’s a process, and I don’t want government being big government … But then again, if Citizens is the only option, we’re telling people to pay 20% more, then I don’t know that this is the answer. Actually, I know it’s not the answer because I don’t want people to have to pay more. They can’t buy houses in Palm Beach County now.”
During this week’s special session, Democrats proposed a change that could have ultimately led to more homes becoming eligible for Citizens coverage.
Under current law, homes outside of Miami-Dade and Monroe counties that have replacement costs of more than $700,000 are not eligible for Citizens policies. The amount in Miami-Dade and Monroe is $1 million because of a lack of insurance competition in those counties. The proposals last week could have led to expanding the $1 million amount to other parts of the state or at least directing the Office of Insurance Regulation to study the idea.
“Floridians are not being treated equally right now,” Rep. Robin Bartleman, D-Weston, said.
The Republican-controlled House and Senate rejected the proposals, which would have been added to the special session’s main bill (SB 2-D).
“I think it’s a topic that we could discuss at another time, but I don’t think it helps us in the situation we’re in presently,” Senate Banking and Insurance Chairman Jim Boyd, R-Bradenton, said last Tuesday after Senate Minority Leader Lauren Book, D-Plantation, proposed a study of the $1 million idea.