Crist's Citizens plan gets a setback


Article Courtesy of The St. Petersburg Times

By TOM ZUCCO
Published  April 24, 2007

Gov. Charlie Crist's personal quest to make state-backed Citizens Property Insurance a true competitor took a major hit Monday when the House Policy and Budget Council approved a bill that would do just the opposite.

In its original form, HB 1267, sponsored by Rep. Julio Robaina, R-Miami, would allow homeowners who are insured privately to switch to Citizens if their insurance company is charging 15 percent more than Citizens. Under current law, enacted in January, homeowners can jump to Citizens only if the premium difference is 25 percent higher.

Good for the consumer, bad for the insurance industry.

A similar bill knocking the threshold down to 15 percent is in the Senate.

But Monday, House members at first stripped all percentage language out of their proposal. Later, they put the 25 percent threshold back in, reverting back to existing law.

The bill also deleted language that would have prevented Citizens from hiking rates in 2008. The governor's office wanted to give Citizens more time to adjust to changes made during the special legislative session. Citizens expects to raise its rates in 2008.

The bill, which now goes to the House floor for debate, also includes provisions that would prohibit new Florida-only subsidiaries known as pup companies, and require existing subsidiaries to report profits from their parent companies.

The move by the House comes less than two weeks after Crist made unannounced visits to House and Senate committees to lobby for a more competitive role for Citizens.

Crist said Monday he is "very concerned" about the House vote. "I want us to continue to make progress on insurance reductions for our people," Crist said, adding that the insurance companies' multibillion-dollar profits are proof that they are "picking the pockets" of Floridians. And he vowed to keep fighting to lower rates.

"You think they won't attack me?" Crist said, his voice rising. "You think they won't attack the House or the Senate? They (the insurance industry) are fighting like crazy to keep these profits, and we've got to be tenacious. We've got to fight back."

Citizens insures about one in four Florida homes, or about 1.3-million. Until January's special session changed the rules, Citizens had to have the highest rates in the state.

But as the company has grown, so has its exposure to risk, which now stands at $434-billion.

"We're absolutely in favor of anything that keeps Citizens from growing," said Barney Bishop, president of Associated Industries of Florida, which represents insurance companies. "Citizens has got all that exposure, but only a couple billion in the bank."

And if Florida is hit by major storms, Bishop said, Citizens' ability to pay claims would quickly dry up. If that happened, all Florida policyholders would be assessed a fee to help make up the deficit.

"The problem won't be the cost of insurance," Bishop said, "but what are the assessments tacked on?"


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