Fla. state Rep. Wood: Fix Citizens now!
Florida state Rep. John Wood, R-Winter Haven, notes in today’s edition of the Sun-Sentinel that the feds aren’t the only ones dealing with a “fiscal cliff.” So long as policyholders of the state-run Citizens Property Insurance Corp. continue to pay “dramatically insufficient insurance rates that don’t cover the true risk on their homes,” so is the Sunshine State.
With Citizens’ 1.5 million policies now representing roughly a quarter of the state’s property insurance market, whenever the state faces its inevitable next major hurricane, Floridians will “be subjected to serious hurricane taxes on our personal and business insurance policies,” Wood notes. While acknowledging a growing consensus that Citizens must shrink, Wood calls out his fellow lawmakers to proceeding “much too slowly,” particularly given that 30,000 new policies flood into the program every month.
Unfortunately, our current public policy is to allow consumers to obtain coverage in Citizens at inadequate rates and then to cap their rate increases at 10 percent annually to avoid financial shock. Of course, no one ever wants to pay higher insurance rates, and Floridians are still recovering from a deep recession. But we’re digging ourselves an ever-deeper financial hole that will be tough to climb out of when the wind blows again.
Last spring, when Citizens’ board considered lifting the 10 percent cap for new business, Florida CFO Jeff Atwater said it would be beyond the Legislature’s intent to do so. If this is so, then state lawmakers should fix this problem in the coming 2013 session.
New policies pouring into Citizens at a rate of 8,000 per week should be priced at the actuarially correct rate so that Citizens’ reserves needed to pay claims down the road will be sufficient. Otherwise, all Florida policyholders will be taxed to make up any shortfall in Citizens’ reserves, and that is wrong.
Additionally, affluent homeowners already in Citizens should pay actuarially-sound rates immediately. Why should someone with a house valued at over $500,000 (excluding land costs) be able to buy “discounted” insurance from the state? Working families should not have to face the possibility of hurricane taxes on their homes, cars and small businesses to bail out well-heeled Citizens policyholders after a hurricane.
Given that, in his private life, Wood is both a realtor and the chief executive officer of housing company John Wood Enterprises, he’s someone who would have plenty of incentive to go along with the status quo of irresponsibly cheap property insurance. That even someone like him is stepping forward to demand change has to be considered a positive sign that Floridians are waking up to the enormous albatross former Gov. Charlie Crist left around their necks.
John Wood represents District 41 in the Florida House of Representatives. Contact him at [email protected].
