It would also become more difficult to join Citizens under the new provision. Homes valued above $300,000, and properties that are not owner-occupied, would no longer be eligible for state-run insurance. Homeowners, who currently can stay in Citizens indefinitely once they qualify, would have to re-qualify on an annual basis under the bill. If a private insurer offered coverage rates within 15 percent of Citizens’ prices, the homeowner would be kicked out of Citizens.
Proponents say the proposals are aimed at steering people away from state-run insurance into the private market, where there are moderate prices that are sometimes even cheaper than Citizens’.
“Shrinking Citizens does not require a majority of Citizens customers to pay more for their insurance,” said Locke Burt, president of Security First Insurance and a former state senator. “We have proved by making over 14 million quotes of Citizens policies that tens of thousands of Citizens customers could save money by purchasing insurance in the private market.”
A Citizens spokesperson declined to comment on the draft bill, stating the insurer is reviewing the proposal.
Some of the measures in the bill came directly from Citizens, including a proposal to allow the company to use its $6.2 billion surplus to back up smaller private companies. The state-run insurers’ “clearinghouse” idea — which allows policies to be offered to the private market before they go into Citizens — was also included in the bill.
The long-running measure also includes proposals to shrink Florida’s Hurricane Catastrophe Fund and allows insurers to raise rates by up to 25 percent without a public hearing. The current threshold is 15 percent.
The decision to stuff so many controversial proposals into a single bill could be risky, as property insurance has proven to be one of the most politically dicey issues in recent years.
Leaders of the Democratic caucus in the House and Senate each said last week that Democrats would be skeptical of any proposals to raise rates on homeowners. In the 40-member Senate, where there are 14 Democrats, any insurance proposal will face a tough task of corralling a 21-vote majority. Coalitions of Democrats and South Florida Republicans have joined together in recent years to vote against insurance measures seen as anti-consumer.
That means only six Republican Senators would have to break ranks to kill the current proposal.
Citizens has 1.3 million policyholders, making up about 23 percent of the market in Florida. As the largest insurer in the state, Citizens covers a large portion of Florida’s 12 million registered voters, including millions of residents in South Florida and Tampa Bay.
Miami Republicans have already filed a bill that is in direct conflict with the latest proposal. That bill would prohibit Citizens from raising rates more than 10 percent per year.
In Miami-Dade County, the average standard homeowner’s policy through Citizens costs $3,300, taking up a 5-percent chunk of the average household budget. In the Tampa Bay area, homeowners’ insurance costs also eat up large portions of families’ earnings.
Some critics of the draft bill say homeowners have suffered enough in recent years, as Citizens has slashed coverage and inspected some 350,000 homes, sparking premium increases of nearly $200 million.
“I would never support that proposal,” said Rep. Mike Fasano, R-New Port Richey, naming several of his Republican colleagues in the Senate he believes feel the same way. “I feel confident that those senators will step up to the plate and stop any further rate hikes.”