This will help to reform Citizens so that it will be able to further reduce its massive size.
Governor Rick Scott has just signed a Florida bill into law which will allow a huge number of changes to be made to Citizens, the largest homeowners insurance company in the state.
One of the goals of the bill is to move more of the policyholders from the state backed insurer into the private market.
According to Senator David Simmons (R – Altamonte Springs), who sponsored SB 1770, “It’s a hell of a victory. It’s a step in the right direction, and it’s a significant step.” The state backed insurer is supposed to be a homeowners insurance company of last resort, but it has swelled into the largest insurer in the state, with whom the private industry can barely – and rarely – compete.
The new homeowners insurance law will become effective as of July 1 and will create a Citizens clearinghouse.
This will give homeowners insurance shoppers the opportunity to compare various policies in the state, including a comparison of the rates at Citizens with those in the private market. When a comparable rate can be obtained through a private insurer, then that consumer will be required to choose that one over Citizens.
The new law also bans Citizens from providing homeowners insurance for homes that have been newly built along the coast. Those are the dwellings that are at the highest risk of damage from hurricanes in the state. The maximum home value for a policy has also been reduced by the bill, bringing it down to $700,000.
The new law also requires an inspector general to be hired by Citizens. This individual cannot be fired and will be tasked with watching over the spending by the company’s executives and to ensure the homeowners insurance company’s adherence to the state purchasing regulations. Last year, a report that was completed by Melinda Miguel, the Chief Inspector General for Governor Scott, determined that the executives at Citizens were exceeding the state standard for travel expenses. The Inspector General will be accountable to the Cabinet and, unlike the previous compliance officers at the company, it will not be possible for the company to fire him or her.