There are two bills in the Florida Legislature poised to be considered before the session ends. Senate Bill 1672 by Sen. David Simmons and House Bill 1109 by Rep. John Wood, both contain language that could wreak havoc upon the lives of Citizens Property Insurance policyholders if they pass and are signed into law by the governor.
Both bills open up the Citizens Clearinghouse to the inclusion of surplus lines insurers starting Jan. 1, 2015. Current law prohibits surplus lines companies from being part of the clearinghouse. The clearinghouse was created in 2013 to allow authorized insurers to compete with Citizens for policies. Allowing surplus lines insurers to participate is a dangerous step that could lead to financial ruin for seniors, families or others struggling to keep up with high insurance premiums.
Surplus lines companies, which are not regulated by the state, can raise rates at will. These companies often entice homeowners into signing with them by offering a low “teaser” premium for the first year, and then rapidly increasing that premium during subsequent renewal periods. At this point the unsuspecting homeowner has lost the ability to return to Citizens because they have signed with a company that is willing to provide coverage. These people face an uncertain future because, unlike Citizens, which is forced by law to raise rates no more than 10 percent per year, no such protections exists regarding surplus lines companies.
Surplus lines insurers were originally created for commercial property owners (i.e. shopping centers, industrial parks) that needed coverage, not residential property owners. Surplus lines insurers have been successful at marketing themselves to the average homeowner, trapping them with the promise of a short-term gain but hitting them with long-term premium obligations that often can’t be met.
Year after year Tallahassee attempts to make business easier for surplus lines companies. Year after year I and some like-minded colleagues fought back at those attempts to open the insurance market to these dangerous insurers. It is terribly disturbing to once again see the governor and some members of the Legislature, in their drive to depopulate Citizens, doing all they can to push people into the dangerous and unregulated territory of surplus lines companies.
I encourage everyone concerned with already high premiums to not only urge a “no” vote on these bills, but a veto if the bills pass and make it to the governor’s desk. If one or the other does become law, then I strongly encourage policyholders to take great care if offered coverage from a surplus lines company. That low rate may sound good at the beginning, but I can guarantee that down the road you will be paying much more and will not have the regulatory authority of the state on your side to help you.
New Port Richey
The writer, a former state representative and senator, is Pasco County tax collector.