Citizens looks to expand coverage

If offered more complete policies, homeowners could see 25 percent savings.

Published January 10, 2007

Citizens Property Insurance is floating an idea that could reduce premiums by as much as 25 percent for many of its more than 1.3-million policyholders. And in the process, it could turn the insurance industry on its ear.

The proposal came up Tuesday, when Bruce Douglas, chairman of Citizens' board of governors, suggested at a Senate hearing that Citizens should eliminate its wind pool, or high-risk, boundaries and be allowed to write entire homeowners insurance policies throughout the state.

Citizens currently has both policies that just cover windstorm damage and those covering all perils, such as fire and theft. This move would combine the two kinds of policies.

And the savings could be startling.

According to a preliminary analysis provided to Citizens actuaries, some Citizens policyholders could see their premiums cut by a fourth.

In November, Douglas stunned lawmakers and the insurance industry when he convinced his board to delay a proposed 55.8 percent rate hike mandated by the legislature.

During an appearance before the Senate Banking and Insurance Committee on Tuesday, Douglas was asked what measure would provide the greatest relief at the earliest possible time to policyholders. He didn't hesitate to answer: "The elimination of the wind pool, and the ability to write whole policies would, in our opinion, result in reduced premiums."

How such a proposal will play when the Legislature meets next week in special session over the insurance crisis is uncertain.

The Senate is currently considering a proposal that would go part of the way and allow Citizens the option to write entire policies only in the high-risk, or wind pool, area.

But Douglas' proposal would take that a giant step further. Not only would Citizens' revenue skyrocket - resulting in lower premiums - it would simplify policies. And by spreading its risk and writing more policies, Citizens could also reduce assessments in the event of a deficit.

But the idea also would put the state-run insurer of last resort in direct competition with the private market.

Douglas also said that if he doesn't see any legislation during the special session that deals with the commissions that insurance agents have been making servicing Citizens policies, the Citizens board would take up the issue in February. Among the considerations: freezing commission rates at 2006 levels.

Times staff writer Jennifer Liberto contributed to this report. Tom Zucco can be reached at 727 893-8247 or zucco@sptinmes.com.