Florida Lawmakers Aim to Shrink State Insurer Citizens

Florida lawmakers are looking to cut the state’s largest property insurer down in size. The plan is to reduce the number of properties insured by Citizens Property Insurance Corp. by raising its rates and stopping it from insuring high-valued homes and some commercial risks.

Senator Alan Hays (R-Umatilla) and Representative Jim Boyd (R-Bradenton) have filed similar bills.

In personal residential market share, Citizens accounts for 14 percent of the market. Citizens accounts for 53 percent of the commercial residential market.

After the 2004 and 2005 hurricane seasons, lawmakers froze Citizens rates. More recently, lawmakers let Citizens rates rise but placed a 10 percent cap on increases.

The rate controls made it difficult for private carriers to compete with Citizens, resulting in growth in the insurer.

Now, lawmakers said it is time to return the insurer to its intended purpose of being the market of last resort. Under the bills filed by Hays and Boyd, the 10 percent cap on rate hikes would be scratched in favor of a 25 percent cap.

Second, the lawmakers want to reduce the value of homes Citizens is allowed to insure. Starting in 2012, homes valued above $1 million would no longer qualify for coverage. That cap would be adjusted downward to $750 million in 2014 and to $500,000 in 2016. As of Jan. 1, 2015, homeowners would only be eligible for coverage if an offer from a private carrier exceeds Citizens’ rates by more than 25 percent.

Also, Citizens could no longer insure commercial non-residential risks, a move that would affect some 8,600 policyholders.

Topics Florida Carriers Legislation