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Big bill—and maybe higher rates—coming soon on Citizens Property Insurance

A massive, multipronged bill to reform Florida’s property insurance market could be introduced soon in the Florida Legislature, as influential committee chairs are determined to shrink Citizens Insurance and stave off potential “hurricane taxes.”

Sen. David Simmons, R-Altamonte Springs, said the Florida Senate and House will work on a major bill to fix the state’s property insurance market, encompassing several controversial ideas while trying not to cause “rate-shock.”

“We’re not going to pull the needle out of the arm of South Florida in one year,” he said. “We’re talking about being able to in fact provide a viable alternative to doing nothing. And that’s critical to us.” 

The statement came after the Senate Insurance and Banking Committee heard testimony from a number of pro-business groups, state officials and other stakeholders. Most groups had a similar message: rates at Citizens are too low and are keeping the private market from expanding. 

The bill to be introduced by the committee would likely encompass a number of different measures, including raising rates faster, shrinking the state’s Hurricane Catastrophe Fund and creating stricter requirements for homeowners seeking coverage from Citizens.

In a state with relatively high and constantly rising insurance premiums, passing the reforms—and rate hikes—envisioned by many of the pro-business groups may be difficult politically. With 1.3 million policies, Citizens is the largest insurance company in the state, and a push to raise its rates further would affect millions of voters.

In South Florida and other coastal areas where insurance rates are highest, voting for even higher rates is a politically risky move. Last year, controversial property insurance reform measures were defeated when South Florida Republicans joined with Democrats to vote down GOP-sponsored legislation.

Some of the presenters at the committee said it would be more risky to leave Florida taxpayers at risk of paying “hurricane taxes” after a once-in-a-lifetime type hurricane.

“It is unfair to continue to require 77 percent of Florida homeowners to subsidize Citizens policies, in addition to 100 percent of businesses, charities, religious institutions, renters, automobile policyholders, local governments and school boards,” said Tom Feeney, president of Associated Industries of Florida, in a statement.

Insurance Consumer Advocate Robin Westcott offered a plan that did not focus on rate hikes.

She pitched an idea that would call for the state to invest in strengthening unprotected homes along the coast, a move that would reduce Citizens exposure by as much as 20 percent.

“In every study that’s been done since Hurricane Andrew, we’ve found that the one central thing that has been brought up has been mitigation,” she said. “Mitigation reduces risk and really is the only answer.”