Bills Highlight Differences of Opinion on Citizens Rates
Citizens Property Insurance Corporation often finds itself in the middle of widely varying opinions on how it should conduct its business. For everyone who says Citizens should reduce its size, someone else will say that Citizens indeed should offer below-market insurance products to consumers. The result, at least currently, is that Florida has a residual property insurance market with well over a million risks in it and it receives about 8000 applications per week.
The differences of view can be seen in recent comments from Florida legislators. When Citizens officials appeared before the House insurance committee last month, several committee members urged Citizens to charge an actuarially sound rate on new business while maintaining the legislatively-mandated glide path on renewal business. Legislators pressed Citizens on why it hasn’t done so already, and concluded by saying Citizens should do so immediately.
Senator Anitere Flores and Representative Jose Felix Diaz quickly followed by following bills to specify that the existing cap on Citizens’ rates applies to new business in addition to renewal business. So much for guidance from the legislature. One thing is clear though– Citizens is selling insurance in many areas of the state at levels that are competitive with, and sometimes significantly lower than, the admitted market. As long as the government chooses to sell a product below actuarially sound levels, the private market will not be able to compete in those areas. Business will continue to flow into Citizens, and policymakers can bemoan the large assessment potential on all Floridians but it won’t change.