Changes in SB 1488 Would Cap Citizens Rate Increases, ‘Standardize’ Territories

Florida’s Senate Banking and Insurance Committee has put finishing touches on Senate Bill 1488 that would bring numerous changes to the industry, including, a cap on any rate increase next year by Citizens Property Insurance Corp.; all insurance companies would have to use a standardized territory map to determine premiums; and policyholders could choose higher hurricane deductibles.

In addition, the bill, sponsored by Sen. Rudy Garcia, R-Hialeah, would require insurers to give customers a checklist so they know what’s in their policies and would remove the ability for insurance companies to appeal rejected rate increases to an arbitration panel.

Garcia, chairman of the Senate Banking and Insurance Committee, postponed a vote on the bill last week so he could have more time to work on the legislation. The biggest change: limiting any Citizens rate increases next year to 5 percent of a policyholder’s premium, a move Garcia said he made because he says there isn’t sufficient information for Citizens to justify its current rates.

“I didn’t want to use a cap in this proposal,” Garcia told the South Florida Sun-Sentinel. “But that’s what we need for the moment until I have more questions answered.”

Citizens spokesman Justin Glover declined to comment on the rate cap because company officials had not yet been able to examine the provision.

The Senate Banking and Insurance Committee OK’d SB 1488 with a single no vote from Sen. J.D. Alexander, R-Lake Wales.

And one South Florida senator vowed to change a part of the bill that addresses the state’s “valued policy law,” which requires insurance companies to pay the full amount of an insurance policy if the property is deemed a total loss.

The problem is figuring out who pays if a home is damaged by both storm surge and wind, losses covered by two separate insurance policies. Some legislators fear homeowners might find themselves on the hook for a massive repair bill if each insurer says it covers only part of the total cost to rebuild.

Sen. Walter “Skip” Campbell, D-Fort Lauderdale, told the Sun-Sentinel he thinks homeowners in such a situation should get what they think they paid for: the full value of their insurance policies, up to the cost of replacing their properties.

“It’s a fairness issue,” Campbell said.

Insurance companies see a fairness issue, too: not having to pay more than they think they owe, said Mark Delegal, a lobbyist for State Farm, Florida’s largest insurer.

If forced to, Delegal said, companies would end up having to raise rates. “That’s contrary to the best interest of Floridians,” he said.