House panel includes coastal preservation in Fla. Citizens reform
TALLAHASSEE, Fla. (March 6, 2013) – The R Street Institute today commended the Florida House Insurance & Banking Subcommittee for approving legislation that would significantly scale back the state-run Citizens Property Insurance Corp.
Sponsored by state Rep. John Wood, R-Winter Haven, H.B. 835 includes strong language that would, starting in July 2014, bar Citizens from insuring newly constructed property seaward of the state’s Coastal Construction Control Line. The CCCL marks the landward limit of the state Department of Environmental Protection’s authority to regulate coastal construction.
R Street Florida Director Christian R. Cámara, who proposed the restriction in a January 2013 R Street policy study, notes that the change would help end state-subsidized development that damages Florida’s coastal environment.
“This change does not prohibit construction seaward of the CCCL, but it does require that the storm risks faced by these beach front properties be borne by the property owners or by private insurers,” Cámara said. “For too long, Floridians have been forced to indirectly subsidize irresponsible development that creates massive future taxpayer liabilities, damages the state’s coastal environment and destroys natural storm barriers.”
Wood’s bill is one of several in the recently commenced 2013 legislative session that looks to pare down Citizens, which is now the largest property insurer in the state. Created as an “insurer of last resort,” Citizens now has $418 billion of coverage in force and nearly 1.3 million policies.
Among its other provisions, H.B. 835 would:
- Clarify that the statutory 10 percent annual cap on Citizens’ ability to raise its rates applies only to renewals, and not to not new policies.
- Create a Citizens inspector-general who reports to the Financial Services Commission.
- Require that Citizens policyholders who are offered private coverage that is within 5 percent of the cost of their renewal premiums be ineligible to renew with Citizens.
- Exclude from Citizens any property whose replacement cost is more than $500,000.
