Florida Insurer Ordered to Take Back Customers

By William Murphy

Published on October 12, 2006

Florida homeowners become eligible for coverage under Citizens if they cannot obtain a basic policy, including wind coverage, from an authorized Florida insurer at an approved rate. Citizens is required by Florida law to charge more than the average rate of the state's 20 largest insurers. The companies that took over the Citizens policies were smaller than the benchmark 20 and under state law are allowed to charge rates above Citizens'.

Some of the smaller insurers, including Florida Peninsula Insurance and HomeWise Insurance, took advantage of the law and raised rates even before obtaining approval from Kevin McCarty, the state insurance commissioner. McCarty expressed dismay at the consequences for those affected by Citizens' move, saying that although the take-out provisions allowing Citizens to pass off customers were written with good intent, the result had been skyrocketing insurance rates for already beleaguered Florida policyholders.

McCarty said he hopes to convince lawmakers to make statutory changes to protect Florida residents forced into similar situations in the future.

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