New legislation is taking aim at efforts the insurer has made to get around the limit.
Lawmakers in South Florida have just filed new legislation with the goal of stopping Citizens Property Insurance from being able to get around the homeowners insurance rate increase cap of 10 percent, by charging the higher rates only to new customers.
This largest property insurer in Florida was tinkering with the idea throughout the last half of 2012.
The state backed homeowners insurance company of last resort has a rate increase cap applied against it, so that it can increase premiums to a maximum of 10 percent every year. In order to try to skirt that regulation, the insurer had intended to apply greater increases only to new customers, which would technically mean that it is a new rate, not an increased one, thereby dodging the cap.
Citizens homeowners insurance stepped back from the idea when the legality of it was questioned.
However, to make certain that the regulations are very clear and that this loophole cannot be used, lawmakers in Miami-Dade County are hoping that new legislation will make it clearer that the homeowners insurance rate cap is applicable to all customers. This is regardless of whether they are existing or new.
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The Florida homeowners insurance legislation also indicates that lawmakers are looking to bring their debate back into the light this spring. This debate has to do with the plans to attempt to further reduce the size of Citizens within the state. At the moment, even after having shed a very large number of policyholders to private insurers, the company still has over 1.4 million home policies in the state.
Leaders in the state, including Governor Rick Scott, have been working solidly for the last two years in attempts to scale the homeowners insurance company back to a more manageable size. However, there remains considerable political tension between those who share this goal and those who believe that it is still critical to have a state-backed coverage option available to property owners along the coast. It is Scott’s argument that Citizens must shrink because the current situation would lead to a costly “hurricane tax” in the event of a catastrophic storm season.