TALLAHASSEE — Painting a bleak picture of Florida’s property insurance system, senators on Wednesday backed proposals to bolster the private market while slowing the flow of policies to the state-backed Citizens Property Insurance Corp.
“The word could be ‘disaster’ is where we are right now,” said Senate Banking and Insurance Chairman Jim Boyd, a Republican from Bradenton who is sponsoring a bill (SB 1728) to try to solve problems.
The Senate Agriculture, Environment, and General Government Appropriations Subcommittee approved Boyd’s bill and another measure (SB 186), sponsored by Sen. Jeff Brandes, R-St. Petersburg, which focuses on changes to citizens’ property insurance.
Lawmakers are grappling with a market in which financially troubled private insurers are dropping policies, refusing to write new coverage and seeking massive rate hikes. Part of the fallout has been thousands of homeowners a week seeking cover from citizens, who had around 777,000 policies as of January 1 – an increase of more than 222,000 policies from the previous year.
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The latest evidence of trouble came on Tuesday when St. Johns Insurance and Lighthouse Property Insurance Corp. told agents they would stop writing new business.
But the complexity of finding solutions was evident at Wednesday’s meeting, as senators discussed part of Boyd’s bill that would allow insurers to sell policies that would not provide replacement coverage for roofs when the roofs are at least 10 years old.
Instead, such policies would reimburse homeowners for roof damage based on the depreciated or “real cash” values of the roofs. An exception would be that insurers would have to pay replacement costs when roofs are damaged by named hurricanes.
The insurance industry blames dubious, even fraudulent, roofing claims for driving up costs. But Boyd’s proposed change would likely force homeowners with older roofs to pay more when their roofs are damaged.
“I worry about the disproportionate impact this is having on low-income families, the elderly, veterans, those in rural areas, who are more likely to have older homes with older roofs” , said Sen. Loranne Ausley, D-Tallahassee. .
Boyd, however, pointed to soaring premiums as he tried to refute arguments about the effects on low-income people.
“In my opinion, what’s going to be disproportionate is that their prices are going to keep going up if we don’t do something about it,” said Boyd, who is an insurance agent. “And it will hit them hard. Some of us can afford a 10, 15, 20% raise. Some can’t. Those who cannot suffer the same increases if we do nothing.
But even if the Senate passes the roof claim changes, it could face opposition in the House, where R-Palm Harbor Speaker Chris Sprows has indicated he is concerned about the idea.
“I want to make sure people are compensated,” Sprows said Wednesday. “If you have a hurricane and you have an elderly person on a fixed income, I realize that they might not be able to get a huge roof. I fully understand the arguments, so we’ll see how the conversation unfolds in the coming weeks.
State leaders have long sought to move policies from citizens’ property insurance to the private market, at least in part because of the financial risks if Florida were hit by a major hurricane or multiple hurricanes.
But residents of some areas have no choice but to turn to citizens for coverage. Additionally, industry officials say citizens often charge less than private insurers, prompting homeowners to seek coverage from what has been created as a public insurer of last resort.
Besides the rooftop claims proposal, other parts of the Senate bills include:
- Address situations where homeowners receive offers of coverage from private insurers. Under the bill, those customers would not be eligible for renewal with Citizens unless private insurers’ premiums were more than 20% higher than what Citizens would charge.
- Elimination of limits on citizen rate increases for properties such as second homes. The limits, known in Tallahassee as the “glide path,” would only apply to primary residences. This year, for example, the glide path prevents citizen rate hikes from exceeding 11%.
- Allow excess insurers to participate in programs to suppress citizen policies. Excess insurers are not subject to the same regulations as standard insurers.
News Service Assignment Manager Tom Urban contributed to this report.