Fla. Day 2: Senate Passes 25% Rate Cut; Citizens Would Enter Commercial

By Brian Kern
January 18, 2007

Two days into a special legislative session, after debating 20 amendments, the Florida Senate voted to pass Senate Bill 4-A, a measure which promises an average 25 percent premium cut to homeowners and lets Citizens Property Insurance Corp. write commercial property policies.

Senate Bill 4-A, authored by their Banking and Insurance Committee, would also allow consumers to have more choice in which coverages to buy. It still faces scrutiny by the Florida House.

Meanwhile, the House, wrestling with five bills, experienced electronic transmission difficulties and as of 5:30 p.m. on Wednesday, only three of its five bills were in the Senate's possession, poised for day three scrutiny.

Banking and Insurance Committee Chair, Sen. Bill Posey, R-Rockledge, said that beleaguered insurance consumers across Florida can expect an average 25 percent homeowners' insurance rate reduction if his bill passes through the House. According to Posey, insurance companies will be required to file their mandated rate reductions with the Florida Office of Insurance Regulation to officially demonstrate that money is being returned to customers.

Resisting the urge to wallow in his team's pending success, Posey said, "We made lemonade out of a lemon, but we still haven't figured out how to make chicken salad out of chicken manure."

In addition to lowered premiums - the exact amount depending on the insurer — Posey said the bill would offer "cafeteria-style options" to consumers who want to tailor a policy to meet their needs or financial limitations.

"Some people are saying they're buying insurance they don't need," Posey said. "This will allow people to buy what they need, want and can afford."

The Senate proposal will also allow the state-created insurer, Citizens Property Insurance Corp., to sell multi-peril coverage and to compete with private insurers. Legislators believe the competition will provide needed relief in the form of lower prices and more choices.

Posey said SB 4-A's goal is to depopulate Citizens into a viable, efficient and profitable market. He said if the bill passes, Citizens will be allowed to write commercial policies, and a $1 million business value cap currently mandated under the Florida Property and Casualty Joint Underwriters Association will be eliminated.

Senate Minority Leader Steve Geller, D-Hallandale, called the Citizens factor the "most controversial issue of the session." A member of the Banking and Insurance Committee, Geller advocates retention of multi-line discounts for customers if they are forced out of private insurers' coverage due to "cherry picking," which leaves them with only Citizens as a viable homeowners' coverage option.

The issue of disallowing the so-called practice of cherry picking by insurers was championed by Sen. Ronda Storms, R-Brandon. Storms believes insurance companies should not be allowed to write auto policies in Florida if they are not also writing homeowners policies.

Sen. Mike Fasano, R-New Port Richey, joined Storms in moving the amendment providing that if insurers offer particular kinds or lines of insurance anywhere it conducts business, that entity must offer the same kinds or lines in Florida.