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The Daytona Beach News-Journal: Don’t push burden of Citizens Insurance onto all Floridians

Wednesday, February 20, 2013

As the 2013 legislative session approaches, Florida House and Senate committees continue to discuss what can be done to address the cost of homeowners’ insurance in Florida. To their credit, they have asked for and received a lot of input from a wide range of stakeholders, including consumer advocates and economists.

Thursday morning, the state Senate Banking and Insurance Committee will hear testimony on a new proposal to “depopulate” Citizens Insurance, featuring testimony by Ormond Beach’s Locke Burt, president of Security First Insurance Co., who will detail how Florida’s private insurers are prepared to take on most of the burden of the property-insurance market. Among the proposals to be considered this year:

Allowing for flexibility in policies, including larger deductibles.
Setting up a “clearinghouse” that would move many new insurance policies — and existing Citizens customers — into the private market.
Tying Citizens’ rates to private-market costs for many categories of property, including commercial land and expensive homes.

As their conversation continues, new information has been revealed that should change the direction the Legislature has taken in the past.

We now know that after the next big storm, or even a series of smaller storms, more than 77 percent of homeowners, together with churches, nonprofit organizations and even local government entities, will be charged higher premiums in exchange for lower-than-adequate rates for Citizens policyholders. Florida is the only state that has adopted policies likely to result in this devastating “hurricane tax.”

In other words, many Florida families who earn modest incomes and pay the full premium for their own homeowners’ insurance will be asked to pay again after a storm to help out Citizens policyholders, many of whom do not even live in Florida. In fact, legislators have learned that tens of thousands of Citizens policyholders live in foreign countries while owning Florida oceanfront property (which they paid for with cash). Single parents, retired persons on fixed incomes and hardworking Floridians at all socioeconomic levels are routinely subsidizing the risks of millionaires on the beach. What really hurts is that those Citizens policyholders continue to pay below market rates with the full expectation that the rest of us will bail them out after a storm.

Our current system is not fair and needs to be changed.

This reminds me of what someone said awhile back: “We have the worst of all possible worlds in Florida — a weak private sector, a public sector bearing enormous risk, and a plan to borrow money and sock it to everybody on the back end … We ought to try something different.”

Consider calling your legislator and telling them Citizens Property Insurance needs to be reformed and the Florida Hurricane Catastrophe Fund needs to be “right-sized.” We need to get it done before the next hurricane season.

Feeney is president and CEO of Associated Industries of Florida, representing business interests in the state. Prior to that, he served in the Florida House of Representatives (including two years as speaker) and then as a member of Congress in a district that included part of Volusia County.


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