, Fla. — Some Florida lawmakers are pushing for what they call a complete reform of property insurance in the state.
HB 1213 proposes opening Citizens Property Insurance to everyone in Florida and moving away from being the “Insurer of Last Resort.” It would trigger a complete remodel of Citizens Property Insurance.
According to the bill, the state-backed insurer would only offer hurricane-related wind coverage, and private carriers would be left to cover the rest of your home insurance coverage.
The bill’s sponsors say, if passed, it could resolve the insurance crisis, but critics say it could cause more problems than solutions.
“Instead of having Citizens provide all the coverage for those folks that have Citizens policies, this would sort of categorize and carve out the most risky elements of insurance, which are these unpredictable storms that you can’t possibly calculate a risk for,” said State Representative Spencer Roach, one of the sponsors.
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Roach says similar models have worked in other states.
California has had their California Earthquake Authority since 1996 and Texas has operated the Texas Windstorm Insurance Association since 1971.
He says the proposed reform would allow private insurance carriers to focus on “bread-and-butter” policies– and leave hurricane coverage up to the state.
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“You’ll be able to write these generic policies, and rates will absolutely drop like a stone,” Roach said.
He says it would take the risk out of private insurance carriers from doing business in Florida, and in turn, lower the rates.
But critics say the reform would do the opposite.
“If the wind portion was taken out and borne by Citizens, your other premiums are going to rise,” said insurance expert Tom Cotton, adding that it would drive private carriers out of the market.
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Cotton says the burden of the program could fall back on Floridians. The bill’s sponsor says proposed program would operate like the National Flood Insurance Program. The national program has struggled to pay off claims with insufficient funds.
“That’s a bankrupt program whose rates are unsound,” Cotton said. “It would do the same thing here. It would still be actuarially unsound, and everyone would have to support it.”
The bill is now in the Insurance and Banking Subcommittee.
Christine Ashburn, Citizens chief of communications, legislative and external affairs, said in a statement, We are reviewing the bill and plan to meet with the sponsor. We are looking closely at all proposed legislation, especially bills that could expand the size of Citizens.”
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