A bill has been proposed by Florida lawmakers to return Citizens Property Insurance Corp. to its original mandate as an insurer of last resort, to return it to competitive balance, and allow the state-run company to hike rates up to 25% annually.

"I'm a firm believer in free enterprise, and the state government has no business being in the insurance business in the first place, and they certainly have no business undermining the premium schedule of the private businesses," state Sen.

Alan Hays (R), sponsor of the bill told Insurance News Net.

The legislation, S.B. 1714, allows Citizens to increase residential policyholders' rates by 25% for any single policy, excluding coverage changes and surcharges. In addition Hays says the bill would restrict those eligible to purchase insurance from Citizens. Beginning in 2012, homes with a replacement value of $750,000 or more would be ineligible for coverage, and, by January 2016, the bill would drop eligibility to homes with replacement costs of $500,000 or more.

Hays told the Orlando Sentinel, "The people of Florida deserve to know the truth, and the truth is that Citizens Property Insurance doesn't have the money to pay claims. If they were a private company, they'd have been run out of the state a long time ago and might even have been indicted for fraud."

Harsh statements for sure but the politician in him is trying to make a point. Government over-regulation, he is saying, is not helping Floridians. Whether he is right or not is open for review.

Interestingly, the legislation also would bar Citizens policyholders, as a condition of coverage, from hiring public adjusters in claims disputes. "The public adjusters, in collaboration with the trial bar, have abused the system," Hays said. "They have basically ripped off the people of Florida." And this is the case of another bold statement and perhaps there is some truth to this also.

Background

According to its website, Citizens is a not-for-profit, tax-exempt government corporation whose public purpose is to provide insurance protection to Florida property owners throughout the state. The corporation insures hundreds of thousands of homes, businesses and condominiums whose owners otherwise might not be able to find coverage.

Citizens operates according to statutory requirements created by the Florida Legislature and a Plan of Operation approved by the Florida Financial Services Commission. The corporation is governed by a Board of Governors that administers its Plan of Operation. Florida's Governor, President of the Florida Senate, Speaker of the Florida House and the state's Chief Financial Officer each appoint two members to the Board.