Officials approve stronger Citizens plan

State officials approved a new business plan for Citizens Property Insurance, allowing the state-run insurer to be more competitive with private insurers and offer some savings to policyholders. The plan, required by the new insurance law passed in January, calls for Citizens to offer a complete policy covering windstorm damage as well as fire, theft and liability in the state's designated windpool area.

Bruce Douglas, chairman of Citizens' board of governors, told the Cabinet that 900,000 policyholders, out of its total 1.3 million, already have multiperil coverage with the company. "This plan is a natural extension of what Citizens already does," said Douglas. It would make Citizens more efficient because it would have to service just one policy. Also, the company estimates that policyholders who opt to buy a single, complete policy from Citizens will see a 10 percent reduction in rates. Mixed policies out of its 400,000 windstorm-only policies, some 118,000 homeowners have their fire and theft coverage with a private insurer. The remainder already have all their coverage with Citizens, but in two separate policies.

The insurer is hoping those 118,000 opt for Citizens' single policy. But Douglas said the company realizes these homeowners might have multiline discounts with their current private carrier, such as for autos and home.

That discount could be greater than the savings Citizens is offering. Douglas also noted that with expansion Citizens can "compete with the voluntary market." Both Citizens officials and state lawmakers are hopeful that element of competition could bring about some lower rates from the private insurers, possibly fearful of losing business to the state-run pool. Gov. Charlie Crist endorsed that approach in comments before Tuesday's meeting". The more rate reductions that we have, the more competition Citizens is able to present, the greater empowerment there will be of the people," he said.

The plan still needs to be approved by the Legislative Budget Commission later this month before Citizens implements it.

Posted by Donald Urschalitz P.A. at March 16, 2007 12:09 PM