An insurance bill making its way through the Senate now provides a small break for homeowners covered by the state-run insurer but ramps up regulation for private insurers operating in Florida.
The Senate bill extends the current rate freeze on policies issued by Citizens Property Insurance through June 2009, rather than the current Dec. 31.
Initially, the Senate banking and insurance committee envisioned extended the freeze through all of 2009.
Increases after next July will be limited to 5 percent for the first year for multi-peril policies and 10 percent in each of the next two years.
For Citizens' wind-only policies, increases will be limited to 10 percent in each of the next three years.
The bill does propose changing a detrimental schedule for surcharging Citizens' policyholders.
Assessments would be limited to a maximum of 30 percent in one year if a huge storm wiped out all of Citizens' reserves. Right now, some Citizens policyholders could be surcharged up to 90 percent of their annual premium in one year.
If the money raised through such assessments isn't enough to cover Citizens' deficit, all insurance policies, except medical malpractice and workers comp, would be surcharged up to 8 percent. The current statute allows surcharges up to 10 percent in one year.
Citizens would have to cover any remaining shortfalls through bond sales.
Another provision won't let Citizens write wind-only policies after July 1.
The insurer would like to write the full multiperil policy because the other coverage would bring in more premium and the losses are more predictable.
The Senate bill also portends big changes for private insurers, including eliminating the provision that allows them to raise rates and then file for regulator approval.
Insurers would have to apply for approval from the Office of Insurance Regulation to cancel more than 10,000 policies in one year. The bill also increases fines OIR can impose on insurers for not complying with the state's insurance code.
Sen. Jeff Atwater, a Republican from North Palm Beach who co-chairs a special Senate committee the investigated insurers' claims-paying and rate-setting practices, said the fines haven't been increased since 1980.
However, some senators argued against the wisdom of getting tough on insurers.
''I think that we made a big mistake. I don't think it's going to do very much to attract more private business into the state so we can have more competition,'' said Sen. Al Lawson, a Tallahassee Democrat and an insurance agent.
Both the Senate bill and one in the House contain a measure to take $250 million from the reserves accumulated by Citizens to fund a capital buildup program for young and start-up insurers. The House bill easily passed on the floor Thursday.
Citizens is relying on these funds to pay future claims. At the urging of Florida's chief financial officer and Citizens officials, the bill was changed in the past week so the money will be returned to the insurer over a 20-year period as the notes are repaid.
Both the House bill and the provision in the Senate both require the companies qualifying for the program to take at least 15 percent of their policies from Citizens.
Miami Herald staff writer Evan S. Benn contributed to this report.
