Insurance-Related Subjects Top Florida Legislature’s To-Do List

The Florida Legislature began its spring session March 8 with insurance-related topics expected to take the limelight with several dozen proposals before the governing body, ranging from giving consumers more tools to navigate the complicated world of insurance, to making it easer for insurers to access cheap reinsurance through the Cat-astrophe fund and trying to fix Citizens Property Insurance Co.

During upcoming sessions, the Joint Committee on Insurance will present at least 20 recommendations, many proposed by the Citizen’s Task Force. The most important include an evaluation of how Citizens sets rates, pays bonuses to agents and if it should continue to insure some of the most expensive coastal property in South Florida. Recommendations by the joint committee are expected to be a starting point to decide how to make property insurance more affordable.

Top proposals include:

“Citizens … is probably the foremost issue that this committee will address this year,” Rep. Dennis Ross, R-Lakeland, chairman of the House Insurance Committee told the South Florida Sun-Sentinel. “… And we have to act quickly, because we’re getting ready to head into another hurricane season.”

After months of waiting for claims to be settled, more than 7,200 Citizens customers complained to the state. They griped about being put on hold for too long and waiting days, even weeks, for claims adjusters to survey damaged homes.

Many of Citizens’ problems, according to the Sun-Sentinel, stem from being pulled two ways. At one time, it was designed to essentially disappear–come 2012 the company is supposed to cut in half its exposure to losses by shedding clients. Meanwhile, despite its rates being the highest, Citizens is growing, on the verge of becoming the state’s largest property insurer.

Citizens, with more than 814,000 policyholders, initially formed as the state’s insurer of last resort, has become the state’s second-largest insurer–and is now targeted to be phased out due to poor service and a $373.1 million deficit in its windstorm account. The company reported 814,081 policies through the end of January, down about 65,000 from its high last year, thanks to a slew of policies taken out by private companies in November, December and January. But officials expect those numbers to rise again.

“This is an entity that isn’t going away,” said Pete Dunbar, general counsel to CFO Tom Gallagher, and chairman of a task force examining Citizens’ operations and service.

Legislators formed Citizens in 2002 by merging two government entities: The Florida Windstorm Underwriting Assoc-iation and the Florida Residential Property and Casualty Joint Underwriting Association, known as the JUA. The windstorm association arose in the 1970s to write policies in the high-risk Florida Keys. The JUA was formed in 1992 to cover homeowners abandoned when some insurers fled the state or went bankrupt after Hurricane Andrew.

But streamlining two insurers into one didn’t solve a deeper problem. Citizens mission “is almost conflicted on its face,” Dunbar said. The company must cover homeowners who can’t get insurance elsewhere, but at the same time is told it must get smaller.

“You ended up creating a business model that ran with very few people in hopes that there would soon be a need to have no people at all,” he said.