Citizens holds off on plan for higher rates for new customers

TALLAHASSEE — Florida’s mammoth state-run insurance company decided Thursday to review its plan to allow unlimited rates for new homeowners following a loud public outcry.

The board of governors decided to ask the staff of Citizens Property Insurance to study the issue further before bringing it up for a vote.

Under the plan, a 10 percent cap on insurance premiums would be removed for any new customer, leaving some customers with paying as much as 50 percent more than existing customers holding similar policies. Citizens is Florida’s largest insurer, with more than 1.4 million policyholders.

Although a wave of complaints from the public and lawmakers prompted board members to postpone a vote, the board members left the door open to approve the plan, emphasizing their mission is to make Citizens the “insurer of last resort.”

“It’s going to be tough at times,” said board member John Rollins. “And it’s going to not always require a painless outcome for every consumer.”

Sen. Mike Fasano, R-New Port Richey, made a rare appearance at the meeting to urge board members to reject the plan, stating that it was not in line with lawmakers’ intent when the Legislature approved the 10 percent cap on rates in 2009.

“It was decided by the Legislature, signed into law by the Governor,” he said. “Now you’re suggesting that the law that was passed doesn’t take into account new business. I would suggest to you that your staff is wrong.”

Fasano held a leadership position in the Senate when the rate cap law passed, as did Chief Financial Officer Jeff Atwater, who sent a letter to Board Chairman Carlos Lacasa urging the board to think carefully about what they were about to do.

“As the President of the Senate during the debate and deliberation of the cap, it was not contemplated that the statute would be interpreted to employ selective application that would result in two sets of rates being applied to the policyholders of Citizens,” Atwater wrote.

A lawyer for Citizens claimed that the rate cap applied only to existing policies. “A new premium for a new policy is not a rate increase, it is a new rate,” said Dan Sumner, Citizens general counsel.

Sean Shaw, president of Policyholders of Florida, said he was not surprised that Citizens decided to move more slowly. He compared it to the insurer’s 2011 plan to raise sinkhole rates by more than 400 percent, which led to a similar outcry and a scaled back plan.

“I don’t understand why Citizens doesn’t take into account these things before they decide to issue decisions,” he said.

In November, Gov. Rick Scott asked Citizens to consider ways to reduce its size and risk that would not require legislative approval, as most major changes to Citizens have in the past.

Citizens’ new interim president, Tom Grady, said he supports Citizens’ overall efforts to reduce its exposure and prepare financially for a major hurricane.

“Citizens need to shrink,” he said. “I personally don’t think that we have an orderly market.”