Florida – Florida lawmakers are currently embroiled in a debate over a significant reform in the state’s property insurance policy. At the heart of this debate is House Bill 1213 (HB 1213), a bill proposing a radical transformation of Citizens Property Insurance, a state-backed insurer. The bill suggests that Citizens Property Insurance should be accessible to all residents of Florida, shifting its role from being the “Insurer of Last Resort” to a more central figure in the state’s property insurance landscape. This change represents a substantial departure from its current operational model and could trigger a comprehensive remodeling of the organization.
State Representative Spencer Roach, one of the bill’s sponsors, outlines a critical aspect of the proposal. The state-backed insurer would focus solely on providing hurricane-related wind coverage. This specialization would leave the responsibility of covering other aspects of home insurance to private carriers. Roach explains, “Instead of having Citizens provide all the coverage for those folks that have Citizens policies, this would sort of categorize and carve out the most risky elements of insurance, which are these unpredictable storms that you can’t possibly calculate a risk for.”
Roach highlights examples from other states where similar models have been implemented with success. He references the California Earthquake Authority, established in 1996, and the Texas Windstorm Insurance Association, operational since 1971, as cases where state-backed entities focus on specific, high-risk coverage areas. The proposed reform in Florida is expected to allow private insurance carriers to concentrate on standard policies, potentially leading to a significant decrease in rates. “You’ll be able to write these generic policies, and rates will absolutely drop like a stone,” Roach confidently asserts.
However, the reform proposal is not without its detractors. Critics, including insurance expert Tom Cotton, argue that such a reform could have unintended negative consequences. Cotton suggests that removing the wind portion of coverage from private carriers and placing it solely on Citizens could result in an increase in other premium rates. This shift could potentially drive private carriers out of the market, leaving a significant burden on Citizens and, by extension, on Floridian taxpayers.
Cotton also draws a parallel between the proposed reform and the National Flood Insurance Program, which has struggled with financial sustainability. He warns, “That’s a bankrupt program whose rates are unsound. It would do the same thing here. It would still be actuarially unsound, and everyone would have to support it.”
As the bill progresses through the legislative process, currently in the hands of the Insurance and Banking Subcommittee, its implications are being closely scrutinized. Christine Ashburn, Citizens’ chief of communications, legislative and external affairs, acknowledges the significance of the proposed changes. “We are reviewing the bill and plan to meet with the sponsor. We are looking closely at all proposed legislation, especially bills that could expand the size of Citizens,” she states.
