Some Florida legislators said this week they would consider giving the state’s largest property insurer more control over its rates, including allowing the company to raise rates to bolster its ability to pay claims.
Members of a key House panel made their remarks after listening for more than two hours to proposals from Citizens Property Insurance officials about ways to shrink the size of the state-created insurer.
Citizens has nearly 1.5 million policyholders and Gov. Rick Scott and others have questioned its ability to stay solvent following large hurricanes. There are fears that Citizens would be forced to impose a surcharge on most insurance policies in the state in the aftermath of a major storm.
Several legislators said they were open to giving Citizens more control over its rates. The state-created insurer’s rate increases are currently capped and cannot go up more than 10 percent a year.
Rep. Bryan Nelson, R-Apopka, and chairman of the House Insurance and Banking subcommittee, floated the idea of allowing Citizens to raise its rates an additional 3 percent higher in order to let the company buy reinsurance.
The discussion on Citizens future is coming amid criticism over a recent decision by Citizens’ president Barry Gilway to abolish the company’s Office of Corporate Integrity. The move led Scott to order his own investigation.
Additionally, the company has been criticized for a proposal to lend $350 million to insurers if they agree to absorb some of Citizens’ existing customers. That proposal got a lukewarm reaction from Nelson and other lawmakers after they heard that only two or three companies were even interested.
Some lawmakers said that Citizens should instead move ahead with ideas such as charging new customers more than existing customers. Citizens looked at a similar proposal earlier this year but withdrew it after legal questions were raised.
Rep. John Wood, R-Haines City, said Citizens should move ahead and get more aggressive in raising its rates even if it means costing people in South Florida more. A large number of Citizens customers reside in Broward, Miami-Dade and Palm Beach counties.
“I’m not going to have Dade County take down the whole state of Florida,” Wood said.
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