The state senator who last week postponed a vote on his bill changing Florida’s last-resort property insurer is back today with a new and, he says, improved version. If his forecast is wrong, however, the Senate should reject the legislation.
In its original form, Senate Bill 1770 was promising. The bill had several parts, but the most important would create a clearinghouse to enable Citizens Property Insurance Corp. policyholders to compare rates with those of private companies. Homeowners might find that they have reasonably priced options for leaving Citizens, which would reduce the company’s exposure. Everyone, in theory, likes the idea of a smaller Citizens.
Then the bill got ominous. Under current law, Citizens rates for existing policyholders can increase no more than 10 percent a year until they are “actuarially sound.” That’s a fancy way for saying that Citizens could pay the claim. SB 1770, however, could have made homeowners who leave Citizens, then get dropped by a private company even after not filing a claim, pay much higher rates. That prospect worried senators from South Florida — Palm Beach to Monroe counties — which has 60 percent of Citizens’ coastal policies. Other changes scared off senators from other regions.
In an interview Tuesday with The Palm Beach Post Editorial Board, Sen. David Simmons, R-Altamonte Springs, denied that he had been trying to punish Citizens policyholders far from his Central Florida district. “I have been working to get a consensus with coastal senators,” he said, adding that the real problem is not the coastal policies that cover all perils — fire and theft, not just hurricanes — but the policies that cover only hurricanes, known as “wind-only.” Said Sen. Simmons: “Most of the ‘multi-peril’ coastal policies are actuarially sound. Some are even priced above market rate.”
Sen. Simmons blamed a “cacophony from the media” — including The Post — for “misinformation” about his bill. But the forecast for those whopping Citizens rate increases — 85 percent in some parts of Palm Beach County — came not from a hearing on the bill but from a hearing to confirm the Citizens CEO. Sen. Simmons says the amended bill “protects” Citizens multi-peril customers from rate shock if they leave for a private carrier and then must return. He also says the amended bill keeps wind-only customers under the 10-percent-per-year rate cap, but seeks to raise rates for those policies over time.
“I think this is a move to financial soundness,” Sen. Simmons said, and a way to “stop the bleeding.” We understand his wish to avoid the statewide assessments that Citizens needed to pay claims from 2004 and 2005. But the Legislature had to create Citizens because so many private companies dropped policies. On property insurance, Floridians are in it together.
Even if Sen. Simmons persuades his chamber today, the House bill is different. If his version remains problematic, there should be a cacophony in the Senate.
for The Post Editorial Board