|Published:||Jan 23, 2013 6:42 PM EST|
|Updated:||Jan 23, 2013 6:42 PM EST|
TALLAHASSEE, Fla. (AP) - A number of unresolved problems haunting the state-backed Citizens Property Insurance Corp. have left the state increasingly vulnerable to catastrophe, the chairman of the Senate Banking and Insurance Committee said Wednesday.
Sen. David Simmons, R-Maitland, said it's time to redefine the mission for Citizens, created a decade ago as the insurer of last resort.
Citizens' instead has grown into the largest property insurer in Florida with more than 1.3 million customers, roughly one-fourth of the total market in the state. The company's growth has resulted in part from artificially low rates.
"We haven't solved the problem," Simmons said during a two-hour, late afternoon hearing. "Any cataclysmic event would have cataclysmic results in Florida."
Virtually all Floridians carrying insurance, whether or not a Citizens' customer, would be liable to make up any shortfall in the event of a catastrophe. Any shortfall in the Florida Hurricane Catastrophe Fund, often known as the CAT fund, would also be made up from emergency assessments.
Simmons said in concluding that his committee staff will meet with their counterparts from the House to draft a bill with the goal of finding some solutions.
"We need to make sure we're going to have a vibrant, private insurance market here in Florida," said Simmons, noting that some of the previous decisions by lawmakers have led to private insurers leaving Florida.
The committee heard a host of ideas on possible ways to reform Citizens.
Florida's insurance consumer advocate Robin Westcott told lawmakers that it's critical for homeowners to strengthen their homes against storm damage to help get a handle on the state's skyrocketing property insurance costs.
"Every major study or work group since Hurricane Andrew has emphasized mitigation as the key to reducing our risk," Westcott said, adding that mitigating the homes would reduce potential losses.
"It is up to the Florida Legislature," said Steve Pociask, president of the American Consumer Institute Center for Citizen Research. "The manipulation of insurance prices by regulation has led to a dysfunctional insurance market in Florida."
David Christian of the Florida Chamber of Commerce told the panel that Florida now has more than $2.5 trillion in total insured coastal property value.
The committee, however, did not get into recent calls to increase the oversight of the state-backed insurer after reports that some Citizens' employees racked up excessive expenses in recent months.
A review by Florida's chief inspector general found more than 50 instances where senior managers were reimbursed for meals in their own hometowns and that former Citizens President Tom Grady took a limousine from his house to the airport. Legislation has been filed in the Senate and House regarding increased oversight on the insurer.
(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
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