Plans by Florida-based Citizen’s Property Insurance to tap the private reinsurance market are stoking a political battle.
Republican Florida State Senator Mike Fasno released a statement last week decrying legislation allowing the purchase of private market reinsurance as “virtually” guaranteeing a 15% premium increase for Citizen’s policyholders.
Fasno described the proposal as “backdoor tax and fee increase” and urged voters to contact Florida Governor Rick Scott to veto State Senate Bill 408, legislation that was intended to reform Citizen’s and allows the entity to purchase private reinsurance.
“The 15% “reinsurance” premium increase allows insurers to make an additional underwriting profit on top of it even if they are buying the reinsurance from an “affiliated company” they own or control,” Fasno says in the statement. “Even worse, these 15% “reinsurance” increases are on top of regular increases for projected losses, and will exponentially multiply in the second and future years as these increases become embedded in the base rate.”
Last week it was announced that Citizens would tap the private reinsurance market for the first time in five years. The political furor over the proposal was first reported by the Miami Herald.
Pro-industry voices have come out swinging in favor of the private reinsurance market move, including the Florida Chamber of Commerce and the Reinsurance Association of America.
Republican State Senator Garrett Richter defended the legislation in a statement Sunday, describing Fasno’s claims as “false statements” that “mischaracterizes and demonizes badly needed public policy reform.”
“The 15 percent reinsurance piece he refers to is a limit to what they are allowed to file for, not a predetermined percentage increase,” Richter said in the statement. “Any rate request must be completely reviewed and approved by the Office of Insurance Regulation (OIR) before it is granted.”
