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Property insurance reform bill passes final Senate committee with name change for Citizens

A sweeping property insurance reform bill passed its final Senate committee on Tuesday. Among other things, the bill would free insurance companies from paying replacement costs of losses up front and from a requirement to offer comprehensive sinkhole insurance. With some critics arguing that means that no private insurers would offer sinkhole coverage, the bill requires the state-run Citizens Property Insurance to offer sinkhole coverage.

That didn't sit well with Sen. Gwen Margolis, D-Miami. "We are going to have a full-blown disaster one day," she said. "This is simply taking all of the people who have sinkhole coverage in their community and putting them in Citizens. Then in another bill we're raising the cost of Citizens."

The bill also includes other gifts to private insurers, prompting Margolis to call it the most anti-consumer bill offered up by the Legislature.

But Garrett Richter, R-Naples, the sponsor of SB408, said the point is to make Florida more appealing to private insurers, who say they can't charge high enough premiums to cover potential losses and they can't compete with the low rates of Citizens.

"The ultimate goal of this bill is to increase competition, to attract underwriters into the Florida market, to attract capital to Florida, to reduce fraud," he said.

Sen. J.D. Alexander said the growth of Citizens, which has 1.3 million policy holders, is potentially the "biggest single financial crisis facing this state."

"If we ever have a major storm, we are in deep trouble," he said. Citizens officials have warned their premiums aren't high enough to cover all their payouts in the case of a huge hurricane or series of storms. That means all insurance policy holders, including those that aren't in Citizens, would have to pick up the tab. To underscore that fact, Alexander introduced an amendment to SB408 that would change the name of the state-run insurer to the Taxpayer Funded Property Insurance Corporation. The measure passed.

John Thompson, a Spring Hill resident, panned the entire bill, saying homeowners had no voice in developing the legislation. Private insurers, he said, are not about to go under. Thompson said his homeowner policy was canceled by four private insurers and forced him into Citizens, even though hurricanes and sinkholes are not new phenomena in the state.

"This legislature is condoning cherry-picking. Let them write what they want, when they want and charge what they want," he said, pointing out that State Farm offered to cover his automobile even though it's parked in the garage of a home the company won't cover. The company, he said, is using money earned from policy holder premiums to pay expensve endorsement contracts to LeBron James and sponsor the NCAA basketball tournament.

"They should not be knocking on your door, the Florida legislature, asking for handouts and crying about losing money," he said. "Yes, losing money on a specific market products possibly, but not on the verge of going broke. No way. No how. It's greed."

The bill passed the Senate Rules committee by a vote of 9 to 3, with Republicans Anitere Flores, R-Miami and Dennis Jones, R-Seminole, voting with Margolis against it.

The House version of the bill gets its first hearing on Tuesday in the insurance and banking subcommittee.