The Senate's sweeping overhaul of Citizens Property Insurance Corp. is on track to make landfall in the House.
The Senate approved by a 24-15 vote on Thursday the wide-ranging measure (SB 1770) that could require new homeowners to pay higher rates when buying a property currently covered by Citizens and would give the governor more say in the management of the state-backed company.
It remains to be seen how much of the bill will survive shearing from the House, which has advanced several bills that lawmakers in areas with large concentrations of Citizens policies, such as Southeast Florida and the Tampa Bay area, have considered less threatening.
The 101-page Senate bill creates a clearinghouse so private companies could take over the least risky policies. It also establishes an inspector general to oversee issues within Citizens, caps annual rate increases for existing policyholders at the current 10 percent, and reduces the maximum value of property that could be covered to $500,000 by 2019.
All are measures that have advanced through the House.
But the bill would also require buyers of homes now covered by Citizens to seek private insurers or accept rates that are deemed more actuarially sound from the state-backed agency. And it would lift Citizens' exemption from bad-faith litigation that blocks certain civil actions, and replaces the president with an executive director who is jointly appointed by the governor and Florida's chief financial officer.
The president is currently appointed by the Citizens board of governors.
Gov. Rick Scott continued to voice his displeasure this week with Citizens, which has been in his cross hairs over salaries that Citizens President and CEO Barry Gilway awarded a number of top executives last year, and degree of punishments handed out after a report by the governor's office outlined travel spending habits of employees and board members.
The sponsor of the Senate bill, Sen. David Simmons, who called the wind-only policies that are predominately found in coastal areas "welfare for the wealthy," expressed confidence that the majority of his bill will get picked up by the House.
The overhaul has been supported by the Latin American Association of Insurance Agencies, the Professional Insurance Agents, and the Florida Chamber of Commerce.
Simmons said the changes are needed to depopulate Citizens and to diminish the threat that the below-market policies within Citizens have on other policyholders, both inside and outside the company.
"Citizens, while it has all these policies, has been issuing policies at actuarially unsound rates, thus putting the entire state of Florida and its citizens, the people of Florida, in significant jeopardy," Simmons said.
Scott has supported the inspector general, clearinghouse, and a provision that caps annual increases to current Citizens policies.
Senators spent two hours Thursday debating the measure that has been delayed twice in the past two weeks as Simmons massaged his proposal to be more palatable for lawmakers.
"My people in my district don't want to be paying for someone else's insurance," said Sen. Bill Montford, D-Tallahassee. "They sure don't want to be paying the insurance for somebody who doesn't live in the state or the country."
But not everyone was convinced the changes are needed.
Sen. John Legg, R-Lutz, said past efforts to make Citizens rates actuarially sound have yet to attract the anticipated increase in private firms into Florida and he doesn't expect that to change with Simmons' proposal.
"The bill is too much, too quick, too soon and it could have too much of an impact," Legg said. Raising rates so fast for properties covered by Citizens could hurt the state's economic recovery.
Sen. Jeremy Ring, D-Margate, said the first target should be reducing the state's risk from the Florida Hurricane Catastrophe Fund, which provides coverage for insurers in the wake of major disasters.
"Get that right and then we can depopulate Citizens," Ring said.
Sen. Jeff Clemens, D-Lake Worth, said Citizens has been getting healthier and has money to cover claims for two one-in-50-year storms. "It's working," Clemens said, echoing a line the governor has been using about job creation efforts.
The bill is expected to drive 217,000 of the state-backed company's 1.3 million policies into private hands. It keeps a current 10 percent cap on annual rate increases for current policyholders. The measure also lowers the maximum value of a property that could be covered to $500,000 by Jan. 1, 2019. The rate would drop by $100,000 a year, from the current $1 million cap.
Buyers of homes now covered by Citizens would first enter a clearinghouse to determine if a private insurer is available. If no private firm is available, the new policyholder would have to pay for a policy at rates deemed actuarially sound by Citizens.