TALLAHASSEE — Painting a bleak picture of Florida’s property insurance system, senators backed proposals Wednesday aimed at boosting the private market while stemming a flood of policies for the state-backed Citizens Property Insurance Corp.
“The word could be ‘catastrophe’ is where we are right now,” said Senate Banking and Insurance Chairman Jim Boyd, a Bradenton Republican who is sponsoring a bill (SB 1728) to try to address the problems.
The Senate Appropriations Subcommittee on Agriculture, Environment, and General Government approved Boyd’s bill and another measure (SB 186), sponsored by Sen. Jeff Brandes, R-St. Petersburg, that focuses on making changes to insurance owned by citizens.
Lawmakers are grappling with a market in which financially strapped private insurers are canceling policies, declining to underwrite new coverage and seeking massive rate increases. Part of the fallout has been thousands of homeowners a week seeking coverage from Citizens, which had about 777,000 policies as of Jan. 1, an increase of more than 222,000 policies from a year earlier.
In case you missed it:Citizens seeks double-digit homeowners insurance rate increases
The latest evidence of trouble came Tuesday when St. Johns Insurance and Lighthouse Property Insurance Corp. told agents they would stop underwriting new business.
But the complexity of finding solutions was evident during Wednesday’s meeting, when senators discussed part of Boyd’s bill that would allow insurers to sell policies that don’t offer replacement coverage for roofs when roofs are at least 10 years old.
Instead, such policies would reimburse homeowners for roof damage based on the depreciated values or “actual cash” values of the roofs. An exception would be that insurers would have to pay replacement costs when roofs are damaged in the hurricanes mentioned.
The insurance industry blames questionable, if not fraudulent, roof claims for driving up costs. But Boyd’s proposed change would likely force homeowners with older roofs to pay more of the bill when their roofs are damaged.
“I am concerned about the disproportionate impact this has on low-income families, seniors, veterans, those who live in rural areas, who are more likely to have older homes with older roofs,” said Senator Loranne Ausley, D -Tallahassee. .
Boyd, however, pointed to the increased premiums while trying to refute arguments about the effects on low-income people.
“From my point of view, what is going to be disproportionate is that their prices will continue to go up if we do nothing,” said Boyd, who is an insurance agent. “And it will hit them hard. Some of us can afford a raise of 10, 15, 20 percent. Some can’t. Those who can’t will be hit with the same raises if we do nothing.”
But even if the Senate approves the changes to the roof claim, it could face opposition in the House, where Speaker Chris Sprowls, R-Palm Harbor, has indicated he is concerned about the idea.
“I want to make sure people are compensated,” Sprowls said Wednesday. “If a hurricane comes and you have a senior on a fixed income, I’m aware of the fact that they may not be able to go and get a huge roof. I totally understand the arguments, so we’ll see how the conversation goes in the coming weeks.”
State leaders have long sought to move Citizens Property Insurance policies to the private market, at least in part because of the financial risks if Florida is hit by a major hurricane or multiple hurricanes.
But residents in some areas have no choice but to turn to Citizens for coverage. In addition, industry officials say Citizens often charges less than private insurers, providing an incentive for homeowners to obtain coverage from what was created as a state insurer of last resort.
Along with the roof claims proposal, other parts of the Senate bills include:
- Address situations where homeowners receive coverage offers from private insurers. Under the bill, such customers would not be eligible to renew with Citizens unless private insurer premiums are more than 20 percent higher than what Citizens would charge.
- Eliminate caps on Citizens rate increases for properties such as second homes. The limits, known in Tallahassee as the “slide path,” would only apply to primary residences. This year, for example, the glide path prevents Citizens rate hikes from exceeding 11 percent.
- Allow surplus lines insurers to participate in programs designed to eliminate Citizens policies. Surplus lines insurers do not face the same regulations as standard insurers.
News Service Assignments Manager Tom Urban contributed to this report.