Rate increases have been the unspoken undercurrent of a property insurance bill cruising through the Florida Senate.
As lawmakers have cast their votes on the quickly-moving and complex bill, few have discussed exactly how much rates would increase under the proposal. With little discussion of the bill’s rate impact, it has sailed through committee and could be debated on the floor on Wednesday.
On Tuesday, Citizens President Barry Gilway gave the first glimpse of the actual rate impact and pointed out that it could be substantial.
“There are 11 territories that would see a rate increase of over 60 percent,” he said
Here are some of the rate increases that will hit new Citizens customers next year if the bill passes in its current form.
Part of Volusia
County: 86.8 percent
Part of Lee County: 62 percent
Part of Broward County: 65.6 percent
Part of Hernando County: 73.3 percent
Part of Monroe County: 137.8 percent
Part of Palm Beach County: 60.1 percent
Other territories in Miami-Dade County and parts of Tampa Bay could also see annual insurance premiums increase by thousands of dollars. Sinkhole rates in places like Hernando County could nearly triple.
Those numbers have been non-existent in the debate over SB 1770, which is reaching a floor vote after bipartisan support in three Senate committees. Some of the lawmakers voting for the bill represent districts where rate increases would hit hardest. Rates would go up mostly for new customers, but that includes people who get dropped by their insurance companies and forced into Citizens, and people who get dropped by Citizens and need to rejoin.
Rather than focus on the numbers that show massive rate increases across the state, the bill’s supporters have pointed to other—often inflated—numbers showing the devastation that would be caused by a once-in-a-lifetime hurricane.
“If the hurricane doesn’t even go through your area, your constituents will be assessed upwards of between $2,000 and $5,000 per year,” Sen. David Simmons, R-Altamonte Springs, told lawmakers last week.
Citizens clarified that Simmons’ figures were overblown by about 43 percent. The company has reduced its risk load significantly over the last year, meaning hurricane taxes are much less like this year than they were in 2012. Gilway pointed out Tuesday that Citizens has enough money — after seven years without a hurricane — to pay for a 1-in-50 year storm. That’s basically a storm as vicious as Hurricane Andrew, which only has a two percent chance of occurring in a given year. It would take two of those storms, or a monster 1-in-100-year storm to wipe out Citizens’ resources and lead to so-called “hurricane taxes”. Citizens is authorized to levy assessments on consumers across the state to cover a shortfall.
While the threat of hurricane taxes has declined significantly since last year, lawmakers have intensified their efforts at reform and are talking more about the danger of assessments.
In 2012--an election year--lawmakers opted not to push reforms and rate hikes, a move that could endanger their upcoming reelection bids. Citizens, under significant pressure from Gov. Rick Scott, opted to make reforms on its own and the unpopular decisions made by the board have helped reduce the company’s risk substantially. Those decisions led to more than $450 million in higher insurance costs in the last year alone.
With no elections this year, lawmakers are pushing for major reforms nonetheless, and SB 1770 could cause insurance rates to soar.
Gov. Rick Scott, who faces reelection in 2014 (when many of the rate hikes are set to take place), has weighed in saying that lawmakers should slow down. He wants current customers to be shielded from rate hikes above the current 10-percent cap.
“The Governor wants to keep the cost of living low for Florida families while reducing the risk of all home and auto insurance policy holders paying a hurricane tax in the event of a major storm,” said John Tupps, spokesperson for Scott. “Any final legislation the Governor signs must meet both of these goals.”@ToluseO