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Senate committee passes bill to shift Citizens' post-storm money moves

The push is on to fix up troubled Citizens’ Property Insurance Corp., which is taking on risk at a rapid pace and stands virtually at the mercies of the elements.

 One of a handful of Citizens’ fix-up bills passed the Senate Banking and Insurance committee Thursday morning, but (like all property insurance bills this year) faces an uphill battle as consumers struggle with growing costs and a sagging real estate market.

The proposal, SB 1346, sponsored by Sen. Steve Oelrich, R-Gainesville, seeks to change the way Citizens collects solvency funds after a massive storm causes it to run out of money.

Rather than collecting money from a “regular assessment”—bills sent out to nearly all insurers in the state for payment within 30 days—Citizens would collect the money using the emergency assessment option. Emergency assessments come out of the pockets of all insurers and Citizens policyholders, and can be paid over several years. They are not capped.

The bill, which eliminates most of the regular assessment on private insurers, is aimed at luring new private insurers into the state. Because Florida is the country’s top target for hurricanes, it’s a no-go area for several insurers.

Companies “will tell you that the regular assessment is one of the greatest impediments to new capital coming to Florida,” said Don Brown, senior fellow at the Heartland Institute, a think tank which supports the bill.

Echoing a common theme coming up at every hearing on a Citizens bill, Sen. Mike Fasano, R-New Port Richey, asked what the direct pocket-book impact would be on consumers.

Sharon A. Binnun, the chief financial officer for Citizens, said the change would be positive for consumers, because after a big storm, assessments would be spread out over time, rather than collected right away from private insurers. Private insurers usually pass on their assessment costs to their policyholders in the form of premium increases at the next renewal.

“The bill doesn’t materially change the totality of what is paid by consumers,” she said. “What it does do is minimize [the impact] at least the first year after an event and... spreads it over time.”

The bill, which heads next to the Government Operations Subcommittee, passed the Senate Banking and Insurance Committee with a unanimous vote.

Bill Breakdown: SB 1346 would effectively shift much of Citizens’ solvency strategy after a major storm to rely on the "emergency assessment," rather than the “regular assessment.” Here are a few differences between regular assessments and emergency assessments:

1) Emergency assessments can be collected over several years, while regular assessments are due (from private insurers) within 30 days.

2) Regular assessments are not levied on Citizens’ policyholders, emergency assessments are. 

3) Regular assessments are capped at an 18 percent maximum, while emergency assessments are unlimited.

Other bills to reform Citizens are making their way through the Legislature as well. Here are a few: SB 1784, HB 941, and HB 833.