TALLAHASSEE, Fla. (AP) -- The Florida Senate on Thursday passed a bill designed to shrink the size of the state's largest property insurer, despite criticism it could hurt some consumers — and even harm the state's recovering economy.
The Senate voted 24-15 for the measure, which would subject those seeking coverage with Citizens Property Insurance to much higher rates than are charged to existing customers. It would also create a clearinghouse designed to route customers away from Citizens and to private insurers.
With a week left in the legislative session, however, it's unclear if the bill will pass because the House has a much more scaled-back version of the legislation.
The state-created Citizens has nearly 1.3 million policyholders and some legislators remain worried that it has too much exposure should a massive storm ever hit the state.
Sen. David Simmons, R-Altamonte Springs, contended that customers of private insurance companies and even some existing Citizens customers will be on the hook for a "hurricane tax" if Citizens is unable to meet its obligations. That's because if Citizens runs out of money, it has the ability to recoup some of its losses by placing charges on most insurance policies in the state — including auto insurance.
"We need to stop the bleeding," said Simmons, who argued that Citizens provides "welfare to the wealthy" because it provides coverage to some homeowners below market rates.
Simmons added that his legislation "doesn't solve the problem immediately but sanity requires that we do something."
But those who opposed the bill contended it will just hurt those needing property insurance in the state. There are also fears it would dampen the economic recovery beginning to take hold.
Sen. John Legg, R-Lutz, said that many people have been forced to seek coverage with Citizens because private insurers have fled the state. Legg said that he found it "fundamentally hard to believe insurance companies don't want to make a buck."
"This bill is simply too much, too soon and would have too much of an impact," Legg said.
Sen. Jeff Clemens, D-Lake Worth, said the bill was unneeded because recent reforms pushed by Citizens' own management has helped reduced its exposure. Citizens shifted nearly 300,000 policies to private insurers last year.
Finding a fix for Florida's property insurance woes has been a recurring problem ever since Hurricane Andrew slammed into the state nearly 21 years ago. Citizens is supposed to be an insurer of last resort for those who can't find coverage elsewhere but it began to grow in size after the state was hit by eight storms in 2004 and 2005.
Amid complaints about rising property insurance rates, legislators in January 2007 froze Citizens rates. Legislators two years later adopted a "glide path" that mandated that Citizens rates could not increase more than 10 percent a year.
The bill passed by the Florida Senate would not affect current customers, but it would require Citizens to charge market rates for new customers.
It would also gradually reduce the value of homes that can be covered by Citizens from $1 million to $500,000 over a five-year period. This provision, however, would not apply to homes in the Florida Keys. Lawmakers carved Monroe County out of the bill because most homeowners in that county are covered by Citizens.
House Speaker Will Weatherford, R-Wesley Chapel, agreed that Citizens has too much exposure, but said he wants to move carefully with any legislation and be "sensitive" to rate increases.
"I think that we want to incrementally change our system when it comes to Citizens and when it comes to our insurance market," Weatherford said. "It's taken a long time to get to the place where we're in."
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