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Senate caps Citizens insurance hikes at 5%

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The Associated Press

Published: April 28, 2009

Updated: 04/28/2009 05:27 pm

TALLAHASSEE - Customers of the state-backed Citizens Property Insurance Corp. are going to see their premiums rise, but by how much hasn't been finalized.

The Senate on Tuesday passed an amended version of a House proposal (HB 1495) by a 34-2 vote and sent it back with a 5 percent cap on the increase — albeit that could be too little in lawmakers' efforts to get the insurer of last resort up to healthy actuarial levels.

Sens. Eleanor Sobel, D-Hollywood, and Rudy Garcia, R-Hialeah, were the only two lawmakers who voted against the measure.

The bill that passed the House last week limits the annual rate increases to an average of 10 percent for more than 1 million Citizens' customers.

Although Gov. Charlie Crist liked the sound of the smaller hike, a compromise of a 10 percent cap was already being discussed.

"Obviously when you are in a tough economy if there is less of an increase that's better for the people," Crist said Tuesday.

Without the legislation, Citizens' policyholders could see premiums increase more than 40 percent on Jan. 1. Instead, they would pay the increase in smaller increments.

The goal of the legislation is to shore up Citizens' solvency and reduce the state's $20 billion exposure on the Florida Hurricane Catastrophe Fund by phasing out upper levels of a state-supported insurance backup pool by $2 billion a year until its eliminated in six years.

"We will finally stop the heavy flow of red ink in the `Cat' fund and Citizens and begin to fully and responsibly pay our hurricane claims," said Sam Miller, executive director of the Florida Insurance Council, an industry group.

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