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Insurance loophole to close
By TOM ZUCCO
Published October 12, 2006
Florida regulators moved Wednesday to close a loophole that has allowed private insurance companies that take homeowner policies out of state-run Citizens Property Insurance Corp. to charge rates substantially higher than Citizens. Under state law, Citizens must charge rates higher than the 20 largest private insurers in a given region, so as not to compete with the private market. The law also requires that if a private company agrees to provide windstorm coverage to a Citizens policyholder, the policyholder has no choice but to switch to the private company, even if the rates are higher. Some companies, including Florida Peninsula and Tampa-based HomeWise, fall under the top 20 and charge rates sometimes 200 percent higher than Citizens. The two companies have taken more than 115,000 policies out of Citizens, most of them in South Florida, but several hundred in the Tampa Bay area. Under the change approved by Florida Insurance Commissioner Kevin McCarty, Citizens will immediately begin recapturing those policyholders who were paying higher rates in the open market. The upshot: Citizens, already with the unwanted title of being the state's biggest property insurer, could approach 1.5-million policies.
[Last modified October 12, 2006, 00:49:47]
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