TALLAHASSEE - Gov.-elect Charlie Crist and a key state senator signaled Tuesday that they'll push during a special January legislative session to stave off a 56 percent rate hike anticipated March 1 for homeowners who buy windstorm coverage from Citizens Property Insurance.
The twin push from Florida's new Republican leadership came just two days before Citizens' board is expected to vote to ask state regulators to approve the rate hike, which is prompted by changes in state law passed in May. If approved, the average 56 percent hike would come on top of an already-approved 25 percent average hike that takes effect Jan. 1.
"That kind of a rate increase is what scares the daylights out of people," Crist told reporters Tuesday. "I'm encouraged that the Legislature is focused on it, too."
Also Tuesday, State Sen. Jeff Atwater of North Palm Beach, a prominent candidate for Senate president in 2008, said he will seek to repeal the law changes that are prompting the proposed rate hike.
Crist's and Atwater's comments mark a dramatic sea change from the policy position of Gov. Jeb Bush, who leaves office Jan. 2, and recently departed legislative leaders. Bush and previous legislative leaders who recently left office had continued to support the May legislation that requires Citizens to move to a more market-based method for setting rates.
Senate President Ken Pruitt, R-Port St. Lucie, stopped short of endorsing Atwater's plan, but said, "This is exactly the kind of proactive approach that will help us to come up with the very best solutions in the upcoming special session. Every idea is on the table."
House Speaker Marco Rubio, R-Miami, so far hasn't committed to a specific policy position.
Citizens is a creation of the state Legislature, a last-resort, state-backed insurer for homeowners. Its rolls have ballooned in the past two years as Florida's insurance crisis has widened.
It now covers one in three Florida homes and has a risk exposure of $400-billion, more than four times the annual budget for Florida state government. When it runs a deficit, all property insurance policyholders are assessed to cover it, as has happened in the wake of the 2004 and 2005 hurricane seasons, when Citizens covered far fewer homes.
Senate Bill 1980
When they voted in May, lawmakers had hoped the higher rate would increase Citizens reserves. But Atwater said he and other supporters had no way of knowing how dramatic the impact would be on individual premium rates.
The law, known as Senate Bill 1980, required Citizens to set homeowner rates as if was buying enough reinsurance on the private market to cover a one-in-70-year storm. Reinsurance is basically insurance for insurance companies. Reinsurance costs have skyrocketed in the wake of Hurricane Katrina and Florida's own hurricanes in 2004 and 2005.
"I was willing to allow the market system to work," Atwater said. "But the market just can't work if you see another market die. This could kill the residential and commercial real estate market in Florida."
Atwater on Tuesday wrote Citizens chairman Bruce Douglas asking him to postpone, until after the legislative special session, a board vote to seek regulatory approval for the 56 percent increase.
Lawmakers are expected to convene Jan. 16, though state leaders have yet to issue a formal call. Atwater and two New Port Richey Republican lawmakers, Sen. Mike Fasano and Rep. John Legg, plan to offer legislation repealing parts of SB1980 to stave off the March 1 increase.
Douglas two weeks ago recommended that legislators revisit the provision, but he's not expected to table a vote on the increase Thursday. That's in part because the company needs the 2 1/2 months' lead time to prepare for the March rate hike should lawmakers not change the law.
"I'm sure the board will consider the letter. As of right now, we intend to file under the mandates of the statute," said Citizens spokesman Rocky Scott.
Citizens also offers covers 16,000 commercial property owners who face stiff rate increases. However, a proposed 600 percent rate increase for commercial policies also to be voted on Thursday is not a result of changes to the law in May and hasn't been addressed directly by policymakers.