With a bill expected soon that is intended to give a massive boost to Floridas property insurance market by shrinking the state-backed insurance provider, business advocates and some environmental groups have already lined up their support.
The expected direction of the bill, as discussed favorably before legislators this past week by groups ranging from the Florida Chamber of Commerce and Associated Industries of Florida to the Florida Wildlife Federation, is to make it harder for homeowners to fall to Citizens Property Insurance while reducing the size of both the state-backed insurance provider and the Hurricane Catastrophe Fund,
Means to do this could come through increased premiums, the creation of a clearing house for private firms to cherry pick accounts, leaving Citizens with only the most risky or uninsurable as it was intended, or breaking up Citizens Property Insurance Corp. into more manageable pieces based upon areas of coverage.
Every business and property owner in Florida should be aware of the ramifications if policymakers do not take steps to reform the states property insurance market, David Christian, chamber vice president of government affairs, told the Florida Senate Banking and Insurance Committee on Thursday.
As with others advocating for changes at Citizens, the message to legislators is that the low, capped rates at Citizens have kept the private insurance market from growing and new capital from coming into the Sunshine State.
Environmental groups, contending that the states property insurance market needs a complete overhaul, hope that any changes will make it so developers think twice before building along endangered coastlines.
The 2013 state legislative session provides our elected officials with another opportunity to reform both Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund, while ending unnecessary state subsidies for high-risk coastal development, Florida Wildlife Federation policy consultant Jay Liles stated in a release.
The Florida Legislature needs to implement thoughtful legislation that will protect Floridians as well as our states wildlife and coastal habitats.
Christian argued that besides returning Citizens to being the actual insurer of last resort, the Florida Hurricane Catastrophe Fund also needed to be re-categorized as a supplement to private insurance, not a replacement.
The lobbying for change has also come from within the state government.
Floridas Chief Financial Officer Jeff Atwater has implored committee members to be cautious about well-meaning bills by legislators seeking to appease constituents without regard to long-term solutions as they craft legislation that would reduce the size and risk of Citizens before the state is hit with a Hurricane Sandy-sized event that puts a fiscal burden on all property owners.
The chambers message was echoed by other business advocates:
Thomas C. Feeney, III, president and chief executive officer, Associated Industries of Florida
With the current structure of Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund, every Florida business, and a large majority of Florida homeowners, continue to run the risk of potentially crippling hurricane taxes to pay the claims of a minority of homeowners as well as out-of-state investors. It is unfair to continue to require 77 percent of Florida homeowners to subsidize Citizens policies, in addition to 100 percent of businesses, charities, religious institutions, renters, automobile policyholders, local governments and school boards. Reform of these government-run entities is not a choice, but an absolute necessity.
Bill Newton, executive director, Florida Consumer Action Network
With Floridas economy still just starting to recover and consumers worrying about costs including insurance, any insurance reform must be crafted to be fair to households who may be struggling. FCAN urges the House and Senate insurance committees to consider ways to mitigate risk and spread the risk. Too much risk is concentrated in Florida with the Cat Fund and Citizens. There are responsible ways to spread the risk beyond our borders that would have only a minimal impact on rates. FCAN believes that Florida is not doing enough to reduce costs through mitigation. Mitigation should focus on hardening our housing stock but should also include protecting our coasts through building codes and development rules.
Charles Lee, director of advocacy, Audubon of Florida
In good conscience, the Florida Legislature cannot continue to require all Florida insurance policyholders, including homeowners, businesses, renters, churches and charities, to help pay claim obligations beyond what Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund can cover. The Senate Banking and Insurance, and House Insurance and Banking subcommittees hearing testimony on the state-run insurer is a positive step in the right direction -- a direction that includes reform. Reducing the risk associated with Citizens and the Cat Fund will undoubtedly benefit our state from a financial and environmental standpoint.
Abigail F. MacIver, director of policy and external affairs, Americans for Prosperity - Florida
With the start of the 2013 session just weeks away, we are encouraged the Senate Banking and Insurance subcommittee and House Insurance and Banking subcommittee are hearing testimony on Floridas property insurance market. It is our hope that the members of these committees and the Florida Legislature as a whole will work to reform both Citizens Property Insurance Corp. as well as the Florida Hurricane Catastrophe Fund. Doing so will encourage more private investment in our property insurance market, while decreasing the hurricane tax risk all Floridians currently face.
Christian R. Cara, state director -Florida, The R Street Institute
The Florida Hurricane Catastrophe Fund and Citizens Property Insurance Corp. pose enormous threats to Floridas economy. The post-hurricane assessments imposed on virtually every resident and business in the state following a sufficiently bad hurricane season could bring Floridas job recovery to a halt -- or worse, leave entire storm-ravaged areas without claims fully paid due to a Cat Fund shortfall. The 2013 regular session might very well be the last chance the Legislature has to enact meaningful, market-freeing reforms to minimize the possibility of these scenarios before our unprecedented run of hurricane-free summers expires.
Steve Pociask, president, The American Consumer Institute Center for Citizen Research
In order to better protect Florida consumers and taxpayers, it is up to the Florida Legislature to take the appropriate steps to correct the ongoing issues related to Floridas property insurance market. The manipulation of insurance prices by regulation has led to a dysfunctional insurance market in Florida. Fixing this issue requires necessary and immediate reform of Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund so that prices are commensurate with risks.
Reach Jim Turner at jturner@sunshinestatenews.com or at (772) 215-9889.
