TALLAHASSEE -- A contentious overhaul of Citizens Property Insurance Corp. passed the Florida Senate on Thursday, after the bill’s sponsor made key changes to protect hundreds of thousands of current policyholders from large rate hikes.
The bill, SB 1770, would drastically reform the state-run insurance company, mostly by pushing up rates for new policyholders and steering current policyholders into the private market.
The 24-15 vote followed more than two hours of testy debate, and two weeks of delay as concerns over huge rate hikes threatened to torpedo the bill.
“Members, this bill does not raise rates,” said Sen. David Simmons, R-Altamonte Springs, trying to garner support on the Senate floor, where controversial insurance proposals often die in tight votes.
Simmons was able to corral a slim majority by filing a 101-page amendment on Wednesday night, drafting language to soften some of the bill’s rate impact. SB 1770 now goes to the House, where lawmakers have pushed a much less aggressive insurance reform package.
If the Senate bill passes both chambers and is signed into law, it would force new policyholders to pay insurance rates that are “actuarially sound,” while protecting current homeowners with a 10-percent cap on increases. In some parts of the state — mostly areas near the coast with “wind-only” coverage — rates would have to double to be “actuarially sound.”
Simmons said market-level rates for new customers were necessary because a massive hurricane could lead to “hurricane taxes” on consumers if Citizens ran out of money.
Thursday’s vote broke down along geographical — rather than party — lines. Democrats and Republicans from inland areas supported the bill, while most lawmakers from coastal areas like South Florida and Tampa Bay voted against it. Most of Citizens policies are in coastal counties, and insurance rates are highest in areas closer to the ocean.
Homeowners in those areas have already seen their property insurance costs shoot up in the last few years. Annual hikes of 10 percent and canceled discounts have cost consumers hundreds of millions of dollars.
While Simmons tried to convince his colleagues that the bill would not raise rates further, opponents accused him of “dancing” around the true impact of SB 1770.
“This is a vote about people who want to raise rates versus those who don’t,” said Sen. Jeff Clemens, D-Lake Worth. “If you want to raise rates, vote for this bill.”
Rates for wind-only policies in places like South Florida and Tampa Bay could go up 70 percent for new homeowners. The cost of a new policy in a non-coastal area could also increase faster than the current 10-percent cap.
In addition to “actuarially sound” rates, the bill creates a “clearinghouse” program to steer homeowners away from Citizens and into the private market, reduces Citizens’ coverage limits from $1 million to $500,000 over five years.
An amendment to the bill also limits rate hikes for some new homeowners who can’t find private coverage.
SB 1770 also allows Citizens to loan out a portion of its $6 billion surplus to smaller private insurers and creates an inspector general at the company, which has become infamous after several scandals last year embarrassed top company executives and angered Gov. Rick Scott.