Fla. Legislature approves small changes to insurer

TALLAHASSEE, Fla. (AP) -- Florida lawmakers took modest steps Thursday to shrink the size of the state-created Citizens Property Insurance — but they rejected a plan to allow the insurer to dramatically raise its rates.

The Florida Senate voted 32-1 in favor of the bill, which now heads to the desk of Gov. Rick Scott. It passed the Florida House earlier this week.

The bill creates a new "clearinghouse" designed to steer homeowners to accept private insurers instead of having them obtain coverage through Citizens. The legislation also phases in over three years a $700,000 cap on the value of homes that can be insured by Citizens.

Lawmakers have pushed to shrink Citizens because of fears that it may not enough have enough money to cover damages from a massive hurricane or a series of storms. By law Citizens can place a charge on most insurance policies — including auto insurance policies — if it suffers too many losses.

The Senate initially passed a bill that would have allowed Citizens to charge much higher rates to new customers. But the House refused to go along.

House Speaker Will Weatherford, R-Wesley Chapel, said last week that he wanted to move slowly before making major changes and that he wanted to be "sensitive" to rate increases. The House also refused to allow the new clearinghouse to place prospective customers with certain types of insurers who do not have to get approval for rate hikes from state regulators

Sen. David Simmons, R-Altamonte Springs, called the bill "Citizens light" but maintained it still makes "tremendous improvements" to the insurer.

"It took a fight but consumer advocates were able to stop the ridiculous rate hikes and keep positive reforms like the clearinghouse," said Sean Shaw with Policyholders of Florida, a consumer advocacy group.

Finding a fix for Florida's property insurance woes has been a recurring problem ever since Hurricane Andrew slammed into the state nearly 21 years ago. Citizens is supposed to be an insurer of last resort for those who can't find coverage elsewhere but it began to grow in size after the state was hit by eight storms in 2004 and 2005.

Amid complaints about rising property insurance rates, legislators in January 2007 froze Citizens rates. Legislators two years later adopted a "glide path" that mandated that Citizens rates could not increase more than 10 percent a year.

Simmons as well as business groups have warned that the state has kept Citizens rates below what is needed to cover the insurer's risk. Citizens insures many homes along Florida's coast, as well as many older homes.

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