The industry is calling for Florida Gov. Rick Scott to sign SB1770—a bill touted as yet another positive step toward stabilizingthe Sunshine's State's property insurance market.

The legislation is meant to return the state-run insurer,Citizens Property Insurance Corp., to its rightful place as thelast-resort option for property owners.

For a variety of reasons—mainly rate suppression—Citizens hasballooned to become Florida's top writer of property insurance. Itis a dangerous distinction considering nearly all the state'spolicyholders could wind up on the hook if Citizens needs money topay claims.

The industry roundly commended the state House and Senate forits work to arrive at a compromise.

SB 1770 retained its number, but it is basically the Houseversion of the bill, HB 909. Days ago the House “amended” the Senate version by replacing it with itsown. The Senate got the bill back and passed it, 32-1.

Nevertheless, SB 1770 establishes a clearinghouse aimed atreducing the number of policies at Citizens. The clearinghousewould allow new and renewed policies to be shopped to privateinsurers before landing at Citizens. A comparative rate analysiswould be generated.

“The Legislature has provided a great tool in our effortto return Citizens to its original purpose as the insurer of lastresort,” says Citizens CEO Barry Gilway (pictured), in a statement.“Through the clearinghouse, many policyholders will be able to findmore comprehensive coverage at a lower price in the private market.That, in turn, reduces the likelihood and amount of assessments onall Florida policyholders face in the event of a major storm.”

The bill also prevents Citizens from insuring homes valued atmore than $1 million. That cap gets lowered gradually until itreaches $700,000 in 2017.

Among the bill's highlights is also a provision banning Citizensfrom insuring new or “substantially improved” homes in areasseaward of the CoastalConstruction Control Line after July 1, 2014.

Independent think tank R Street says the provision is based on aproposal it provided. Christian R. Camara, the group's Floridadirector, calls the bill a “win for Florida taxpayers, consumers,businesses and charities, by moving toward restoring Citizens as atrue insurer of last-resort, promoting competition in the state'sinsurance market, and protection Florida environmentally-sensitivecoastal areas.”

However, the bill no longer contains language related toCitizens' rates. The original Senate bill outlined a planrequire Citizens' rates to be actuarially sound for new businessstarting Jan. 1, 2014.

These provisions were removed by the House, and while the G.Donovan Brown, state government relations counsel Property CasualtyInsurers Association of America (PCI), commended SB 1770, herecognizes “Much more work needs to be done to address the currentexposure and rate inadequacy of Citizens.”

“Citizens remains too large and still exposes Floridapolicyholders to a hurricane tax,” he adds.

Notes

- Gov. Scott has seven days to review and signthe bill if it lands on his desk before the end of session, May 3.Otherwise, he has 15 days.

- The bill also creates an inspector general tooversee Citizens.

- Another provision omitted from the Senatebill by the House replacement had to do with opening up Citizens tobad-faith litigation.

- The Citizens' board is expanded from eight to nine members—theaddition being an advocate for consumers appointed by thegovernor.

- The Florida Hurricane Catastrophe Fund isrenamed the State Board of Administration Finance Corp.