The Florida Legislature voted to extend a rate freeze for customers of Citizens Property Insurance.
The May 4 measure was a top priority of Gov. Charlie Crist, but was among the last bills passed by the Legislature before it ended its regular 60-day session Friday afternoon.
It also forces regulators to factor in the national profits of insurance companies when determining Florida rates. It would also prevent national insurance companies from setting up Florida-only subsidiaries, which Crist has complained allows companies to seek higher rates by claiming poverty in Florida while making a profit nationally.
Crist praised the Legislature for sending him the bill, and took a fierce stab at the industry he’s made a habit of blaming for high premiums.
“I hear some groans from insurance lobbyists,” Crist said after lawmakers adjourned. “Tough. It’s a new day in this place.”
The House passed the bill (SB 2498) 106-10. A short time later it passed unanimously in the Senate and was sent to Crist.
The feature of the bill that will be immediately felt by the most people will extend a freeze in rates for customers of state-backed Citizens, the largest property insurer in the state.
The company’s rates were frozen by lawmakers at current levels in January until the end of 2007. They will now remain at current levels until the end of 2008.
Insurance companies said the section dealing with their national profits is unfair, saying Floridians wouldn’t stand for paying higher rates to pay for California’s earthquake risk, for example.
“It sends a bad message that you’re going to do rates in Florida unlike any other state or jurisdiction in the world,” said Mark Delegal, a lobbyist for State Farm Insurance.
Delegal also hammered at the provision preventing future Florida-only subsidiaries, even though it wouldn’t affect companies like State Farm that already have offshoots here.
“Philosophically, that’s just not heading in the right direction,” Delegal said.
“You want a global company to come to Florida, that’s part of the solution.”
If they can’t segregate their Florida risk, they simply won’t come, insurers argue.
The measure, sponsored by Sen. Rudy Garcia, R-Hialeah, and Rep. Julio Robaina, R-Miami, also makes it likely state-backed Citizens will expand, allowing residents to buy insurance from the company if private companies rates would be 15 percent higher than what Citizens can offer.
The effort to expand Citizens passed over the objections of a number of inland lawmakers who would rather do away with the state company than expand it. Most inland residents are not in Citizens, but they are charged assessments if Citizens comes up short and unable to pay claims.
In the House on Friday, Rep. Dennis Ross led a failed effort to remove Citizens’ authority to assess other homeowners when it comes up short, calling the state’s creation of the insurance company “as close to a socialist policy as we’ve ever come.”
Ross, R-Lakeland, said Citizens doesn’t have enough money to cover its potential claims, and won’t likely be able to. Everyone else will pay for the next big hurricane, he said.
“We obligated ourselves to death – that’s my concern about having the state of Florida in the insurance business,” Ross said.
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