The changes will be discussed at a Cabinet meeting on Tuesday. Many would reduce Citizens’ financial risk to Floridians by millions of dollars without changing any laws. Some would effectively allow Citizens to shed policies and raise premiums.
Citizens is the largest property insurer in the state with nearly 1.5 million policies. All automobile and property insurance policyholders in the state would be charged fees if a major hurricane triggers deficits for Citizens.
Gov. Rick Scott recently ordered Citizens to develop ways to shrink and implement them by June.
Carlos Lacasa, Citizens' board chairman, asked the insurer's employees to report the impact of each recommendation on premiums the insurer collects. He said the changes are needed but "no one can be comfortable” offering worse coverage at higher prices and the board is sensitive to that.
Critics, including Tampa Attorney Sean Shaw, called on Cabinet members to challenge the changes.
Some recommendations don’t require approval from regulators and Citizens plans to move fast on them.
In December, it wants to change it rules to raise its sinkhole deductible to 10 percent and cap coverage for its roughly 7,500 coastal policies with more than $1 million in coverage or non-renew them. It wants to reduce coverage for personal liability, liability for mold and loss assessments – coverage that helps condominium unit owners pay assessments charged by their condo associations to cover damage and improvements. It also wants to lower the default coverage sold to consumers for contents coverage, which covers furniture and electronics. The rule changes would take effect in May for new policies and June for policies that are up for renewal.
Citizens already plans to drop coverage for gazebos, most carports and screened-in pool enclosures – almost everything but the main building on a property.
Citizens also wants to rethink rates for contents coverage and other structures as part of its rate hike request for 2013.
By March, Citizens wants to change its rules to drop more policies for homes that are considered vacant and eliminate coverage for damage from dropped objects, which would limit coverage for cosmetic damage to tiles on the floor of a home. It also wants to reduce coverage for high-value property such as jewelry, guns and silverware and for water damage such as pipes bursting and require homes 30 years or older that want coverage to have a 4-point inspection showing the electrical, heating and plumbing systems have been updated and are in good condition.
By the third quarter of next year, Citizens wants to add a fee for policyholders based on whether they’ve had claims in the past; drop ordinance and law coverage, which pays to make repairs for damage comply with new building codes, for everything but the main building of a property; and consider phasing out hurricane-proofing discounts five years after an inspection.
The changes made by the third quarter would be effective by early 2013.
About a dozen changes would affect policies for condominium buildings or businesses.
Citizens Spokeswoman Christine Ashburn said the board will approve the technical details of the recommendations in mid-December and can tweak them then if needed.