Citizens Property may stop issuing policies for homes worth more than $1 million.

Citizens Property may stop issuing policies for homes worth more than $1 million.
By Kathy Bushouse South Florida Sun-Sentinel Posted January 31 2006

ORLANDO -- Legislators would be asked to keep owners of coastal homes valued at more than $1 million from getting homeowner insurance coverage from Citizens Property Insurance Corp. as part of a series of recommendations being weighed by a statewide insurance task force.The $1 million cap on insured value is one of a number of sweeping recommendations in a 28-page draft report to overhaul Florida's troubled insurance market.
Give some Citizens policyholders three to five years to retrofit their homes so they can find insurance policies from private companies.Create grants and low-interest loans that people can tap to fortify their homes to prevent hurricane damage.Delay a state mandate to shift Citizens' wind-only coverage from Interstate 95 to a point farther east, which would move thousands of policies out of the high-risk category.Study the impact of reducing eligibility for Citizens coverage to homes with insured value of less than $500,000.Require a 25 percent rapid-cash buildup for the Florida Hurricane Catastrophe Fund, which is starting 2006 with a low balance, to help insurers pay claims should another hurricane hit. Insurance companies pay this initially but pass the cost onto their customers.The state's Task Force on Long-Term Solutions to Florida's Hurricane Insurance Market convened Monday at the University of Central Florida in Orlando for two days of debate on its draft report, which should be completed next month and sent to the Legislature. The group includes state officials, insurance experts and industry representatives."I think the Legislature is very serious about reducing Citizens' exposure," said Insurance Commissioner Kevin McCarty, the task force's chairman.Cutting the number of homes it insures for more than $1 million would help, said Susanne Murphy, Citizens' corporate counsel. The company has more than 6,000 homes insured for more than $1 million, and shifting those policies to private insurers would reduce Citizens' exposure by $900 million, Murphy said.Ultimately, that could mean the company would be able cover its losses without assessing all of Florida's policyholders. A $516 million shortfall in Citizens' high-risk account after the 2004 hurricane season meant that all policyholders in the state paid to make up the company's losses.That assessment was an additional $68 for every $1,000 of premium homeowners pay to insure their homes.The task force hasn't stipulated whether condo units would also be affected by the limit.Task force members said that people with million-dollar policies should be able to find coverage from the surplus lines market, which charges rates that are not regulated by the state. But the state should ensure there are willing takers in the surplus lines market before limiting coverage, said Steve Burgess, the state's insurance consumer advocate and a task force member."We have to make sure that the people in this circumstance have some access," Burgess said.At Monday's meeting, the group also discussed the possibility of using sales tax money to help deflect possible future Citizens assessments and to help shore up the Florida Hurricane Catastrophe Fund.The task force is expected to discuss building codes at today's meeting, and could also vote to finalize their recommendations to the Legislature.While making changes to state-backed Citizens is a large part of the group's charge, the group's ultimate goal is to get more insurers to issue policies for Florida's homes, making it easier and perhaps even cheaper for people to get insurance coverage.