Curbing the threat of higher rates from Citizens

Last year, as I ran to represent the residents of Miami-Dade County in Tallahassee, I kept hearing the same concerns — “Our property insurance rates keep going up to the point where we can’t afford to be insured.”

The only safeguard against a catastrophic increase in rates is a 10 percent cap that the Legislature put on Citizens Property Insurance rates. That is why I was shocked and appalled when Citizens announced in the summer of 2012 that it would exploit a loophole in the law that might allow them to increase rates in an unlimited manner.

By uncapping rates for new customers, Citizens could increase rates by double, even triple beyond that which they are currently allowed to do. The mere prospect of an increase of that proportion is bone-chilling for the residents of South Florida. If ever implemented, an uncapped rate system for new customers would create a two-tier portfolio for the state’s insurer of last resort.

That bifurcated system would create unintended consequences, such as those created by capping property taxes via “Save Our Homes,” forgetting that new homeowners would pay significantly more than old homeowners grandfathered in under the old law. By failing to boldly reform our state’s tax structure and simply maintaining property taxes for old homeowners artificially low, many of those homeowners became trapped in their homes.

These inequities in the system have heavily burdened our real estate market, one of Florida’s most important economic engines. We have to keep in mind that without property insurance you cannot obtain a mortgage to purchase a home. I fear for our economy, specifically in South Florida, should new homes be inadvertently struck with astronomical property insurance premiums.

Worse yet, the Citizens proposal would encourage it to make its policies so unattractive that you would have to leave their capped rates, only to have to pay significantly more should you ever be forced to return because the other carriers dropped you. These are frightening results — in a state where insurance premiums are already scary enough.

When I ran for office, I promised that I would file legislation to curb this threat. That is precisely what my first bill, HB 107, aims to do.

In a session when some are suggesting that the Legislature should remove or increase the 10 percent rate cap (which we will fight), Sen. Anitere Flores and I are promoting something which will create a true cap for all Citizens policyholders, old and new. Some have called our plan “insurance equity,” I call it the right thing to do.

This is only a start — there will be plenty of bills this session that will deal with Citizens — from creating an inspector general that oversees their operations to demanding more accountability from the insurance company, our agenda will be jam-packed with reforms.

What cannot be lost during these discussions is the very real impact that home insurance rates have on our community and all of its residents. As we prepare to start our 60-day legislative session in March, the Miami-Dade Legislative Delegation will be a key player in these negotiations.

Jose Felix Diaz represents District 116 in the Florida House of Representatives. He is the Vice-Chairman of the Miami-Dade Legislative Delegation.

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