Florida Insurance Commissioner Kevin McCarty proposed major changes to the Florida property insurance system, especially for Citizens Property Insurance, at a presentation made to the state Senate Banking and Insurance Committee on Wednesday.
McCarty’s goal is to reduce the risk to state-run Citizens, which accounts for 21 percent of the market – generally the most vulnerable properties. Citizens rates are often below private carrier rates.
The risk of a catastrophic storm hitting Florida could wipe out Citizens’ reserves and cause assessments to all insurance policy holders in the state.
The presentation given by McCarty had a list of steps to take. Among them:
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Focus the Coastal Account (high-risk properties near the coast) of Citizens only on wind and separate it from the rest of Citizens.
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The Citizens rate plan should be based on the Top 20 private insurance writers and the annual rate cap should be transitionally adjusted.
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A clearinghouse would help consumers find insurance while making sure that they only use Citizens if that can’t get a private policy within 15 percent of the Citizens rate.
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Citizens shouldn’t write policies on new construction in the Coastal Building Zone unless the project meets “Code ” standards.
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Citizens can share risks with the private industry.
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Evaluate mitigation credits using the Commission on Hurricane Loss Project Methodology - allowing to use these in their overall rate levels.
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There should be a voluntary reinsurance pool for wind exposure that private insurers in Florida could enter.
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Give consumers a greater ability to select the deductibles and coverage that they desire, including specially tailored policies.
Any changes that take place are ultimately decided by the state Legislature
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