A clearinghouse designed to keep more customers out of state-run insurer Citizens won’t force consumers to choose “surplus lines” companies whose rate increases are unregulated, the Florida House decided Friday.
The amendment by Rep. Mike Fasano, R-New Port Richey, passed on voice vote, one of several revisions to an insurance package shaping up differently from efforts in the Senate as the session nears a May 3 close.
It was one of several “good consumer protection changes to an already decent bill,” said Jay Neal, executive director of the Florida Association for Insurance Reform, an advocacy group representing homeowners and others.
The House moved within one step of final passage of several insurance bills that are shaping up to be easier on consumer wallets than a Senate plan that passed Thursday, which would uncap rates on new Citizens customers. SB 1770 could mean rate increases up to 85 percent for future customers of Citizens in Palm Beach County.
Next week, the two chambers will have to work out differences to send a final product to Gov. Rick Scott.
Fasano led efforts to vote down an amendment, 61-53, that he said could raise consumer rates by allowing insurers to pass along certain costs for reinsurance, insurance that insurance companies buy.
“It will increase rates with absolutely no regulation by the Office of Insurance Regulation,” Fasano said.
Rep. Bill Hager, R-Delray Beach, withdrew an amendment to shrink the Florida Hurricane Catastrophe Fund, a state-created reinsurance pool. Opponents said that could raise rates by forcing insurers to buy more coverage from private sources whose rates are unregulated. Hager argued private reinsurance rates are going down but pulled the measure.
The House also approved an amendment that will reduce the maximum coverage from Citizens from $1 million to $700,000 over several years. The Senate version reduces it $500,000.
Both chambers create a clearinghouse that would aim to keep customers out of Citizens if coverage from private insurers is available, though differences in details remain. The House version says a customer is not eligible for Citizens if a private insurer is writing a policy at the same or lower cost and makes clear consumers cannot be forced to take policies from surplus-lines companies, which unlike regular “admitted” insurers can raise rates at will.
The clearinghouse is designed to make sure customers know about choices besides those available to agents who may be tied to one or a few companies that are not writing new policies. An example often cited is State Farm agents.
The Senate bill is not causing many cheers among South Florida homeowners.
“This bill to raise windstorm rates by 85 percent on new homeowners will probably drop sales into the toilet again,” said Jupiter homeowner Larry Handler. “Guess the dumb people up there in Tallahassee are looking for another real estate bust.”
The Senate bill also concerned the state’s former insurance consumer advocate, attorney Sean Shaw.
“The bill has been vastly improved, but it’s still a huge threat to our housing recovery,” Shaw said. ” We believe in the clearinghouse and incremental changes to Citizens, but this is way too much, way too quickly for policyholders and our housing market to absorb. We will continue to fight this bill.”