Destroying Citizens

Senate Bill 1714  was introduced by Sen. Alan Hays (R Umatilla) whose name you probably recognize from hearing about his other bills. The goal of SB 1714 is the destruction of Citizens Property Insurance Company because Senator Hays and many others in the Legislature believe in the “free market” which means Floridians must pay whatever insurance companies demand, no matter the consequences.

But it is not solely on the basis of ideology that Hays and others pursue their goals.  Insurance interests contributed over $7 million to the legislature in 2010. And let’s not forget that insurance companies are making lots of money using discredited “black box” models.

Let’s look at some of the provisions of SB 1714 and gauge the impact.  Citizens is now limited to 10% rate increase per year, something we call the “glide path” to actuarially sound rates. SB 1714 would not only allow 25% rate increases, but would actually prohibit rate decreases. How many of us can afford that additional money each month? How will this affect businesses where those funds would have been spent? How many jobs will be lost?

The bill would prohibit Citizens customers from hiring a public adjuster to help them with their claim. That means you would have no choice but to accept Citizens assessment of your claim, although it is unclear if your contractor could also adjust the claim. I suppose you could always sue Citizens if you’re unhappy with what they’re paying you.

There’s more. The Legislature intends to try to force more people into Citizens by changing the eligibility requirement from 15% to 25%. That means you won’t be able to buy Citizens less expensive coverage unless it is more than 25% less than the private market. You can add that to your 25% increase from Citizens.

Another provision limits Citizens ability to insure homes valued over $500,000. Now, you might think that there’s no reason Citizens should be insuring them, but wait a minute. Those are the best customers because high value homes are newer and safer, and they buy more coverage. That helps lower the cost for everyone else in Citizens. But the insurers want these lucrative customers back. I was surprised they ever let them go.

What you will see if this bill becomes law, is rate increases of 50% if you are in Citizens and a private company decides it wants you; 25% if you manage to stay in Citizens. But if you stay, good luck with your claim, although Citizens claims service has actually been pretty good.

SB 1714 also removes “bad faith” liability from Citizens. That means if Citizens intentionally screws you over, there’s nothing you can do. This fits with the Legislature’s rigid ideology – you’re on your own.

Is there any way to stop this from happening? The Legislature isn’t listening to you, they are listening to insurance companies and free market necromancers. But legislators may fear the wrath of voters holding premium notices. Legislators may be in less gerrymandered districts next year due to Amendments 5 and 6. They don’t care about you, but maybe they care about themselves. Does that give you hope?