"be the change you wish to see in the world….."
My work on the Citizens Property Mission Review Task Force will be coming to an end soon. MSNBC, the Tampa Tribune, and the Sun-Sentinel have all run stories on Tuesday’s upcoming Task Force meeting. There are a multitude of issues coming up. I might as well report on some of my views.
The rates will have to go up. Next July, Citizens must file for actuarial sound rates and, at this time next year, the rates will go up. This is only fair. It is not right that the State of Florida and others provide a subsidy to Citizen policyholders where a valid market exists.
I propose that any increases be annually capped at 10%. This stops the shock increase problems that lead to the calls for politicians to "do something." The legislators need to stop trying to run Citizens through legislation and using it as a means for political pandering to the electorate.
Allowing rates to be raised at a reasonable level and requiring people to move out of Citizens should go a long way to establish a smaller Citizens. Florida cannot afford a major hurricane while so many are insured by Citizens. If admitted and regulated carriers can insure at a rate within 15% of Citizens or less, with as good a product, then policyholders should have no right to claim an entitlement to Citizens. To allow otherwise, would be supporting a socialist political agenda over free enterprise — at the risk of bankrupting the state.
Agents should be able to explain to those moving out of Citizens how the Florida Insuraqnce Guarantee Association works and that it provides coverage in the event of a default by an admitted insurance company. Current law, as I understand it, does not allow this. Agents should always teach their consumers how the entire insurance system works.
I do not think new construction should be exempted from insurability by Citizens, regardless of where the new construction exists. While there may be valid concerns about the growth along our beaches and close to the coastal areas of our state, people want to live and work in these areas. Development and redevelopment of these areas must meet strong code requirements that strengthen structures against hurricane damage. We do not however, need to shut down development of these areas. Monroe County is almost entirely insured by Citizens and such legislation would have a devastating impact upon those areas and Florida’s tax base. We need Citizens to be available in areas where the private insurance market refuses to fully participate. This has been a longstanding problem for coastal communities.
We need to continue mitigation and strengthening incentives for existing structures. Doing so lowers the chance of loss, makes structures more easily insurable, and promotes a long term objective of risk management required for insurance to remain affordable and available. The best loss is one that does not happen because the structure withstood the catastrophe with no damage.
Those are some of my current thoughts. The insurance industry will scream because they want no limit on what they can charge–free enterprise run amuck. Citizens policyholders will scream because they want no rate increase whatsoever–socialistic paternalism. Everybody else has a stake in what we do and maybe they will tell these two groups to shut up and play fair.