Citizens Property Insurance debate once again heating up Florida
The Citizens Property Insurance Corp. debate is heating up once again in Florida. Despite a legislative session that largely steered clear from this contentious issue earlier this year, a recent proposal by Citizens board members is drawing a lot of attention (and scorn) from lawmakers and others.
The proposal presented by some Citizens board members, including John Rollins (an actuary), would preserve the maximum rate increase of 10% for existing Citizens customers at renewal, as required by the 2010 “glide path” law, but would require the company charge actuarially-sound rates for all new business. If enacted, new policyholders would be charged rates an average of 30% higher than existing Citizens customers.
Proponents cite two major benefits:
- The higher rates would encourage consumers to seek coverage in the private market, transferring risk away from Citizens (and taxpayers), as well encouraging more companies to bring their capital into Florida and do business; and
- They would shore-up Citizens’ reserves and decrease the likelihood and severity of post-hurricane taxes on all Florida residents to bail Citizens out after a bad hurricane season.
Despite the obvious benefits, the proposal has unleashed major pushback from South Florida legislators and other politicians who want to preserve Citizens’ unfair pricing advantage to the detriment of competition and the state’s taxpayers.
Other lawmakers, however, understand the threat that an under-priced state-run property insurer poses to taxpayers. One such lawmaker, state Rep. John Tobia, R-Melbourne, penned an op-ed in response to the critics of the proposal in which he lays out the reasons why Citizens should be returned to its role as an insurer of last resort.
Rep. Tobia understands that Citizens in its current form undermines free market competition and poses an enormous threat to the state’s taxpayers. Instead of kicking the can down the road to let others deal with the crisis that an insolvent Citizens would ignite, he lays out the facts and makes it clear that the responsible thing to do is to deal with Citizens now before it is too late.
If only more politicians applied their free market conservatism beyond campaign season.
