Editorial: Florida’s Citizens Insurance Corp. eyes raising insurance cap

The issue is that by legislative directive, Citizens cannot provide replacement cost insurance coverage of more than $700,000 for homes, except for Miami-Dade and Monroe Counties, where the limit is $1 million.

But as the insurance market has crumbled and home values have soared, some homeowners are hitting this cap. When the cap was enacted, it made sense that a consumer-backed insurer of last resort should not insure the homes of uber-wealthy individuals.

However, as insurance companies have left the market and home values have soared, homes of more working-level citizens, located in some areas, could be bumping the cap, so Citizens Insurance is faced with the ethical question: should the insurer of last resort limit the coverage cap on its homeowner policies. This is particularly the case since homes financed through Fannie Mae or Freddy Mac are required to maintain replacement cost coverage.

Raising the cap may be necessary, and it should be considered among reforms needed in the industry. But since Citizens is backed by residents, perhaps legislators should consider raising the cap on mortgaged properties insured by Fanny Mae and Freddy Mac but keeping it on homes without mortgages,

But we should repeat, this is only one of the possible patches for an already leaky system. What is really needed is a thoroughgoing reform of the property insurance market in the state so that most insurance is provided by private companies backed by investors or investment firms, not by a company ultimately backed by citizens of the state.

Until we do that, we will continue making ad hoc decisions to keep the market from completely collapsing. This is no way to run a company, or a state. We urge our legislative delegation to put this issue at the top of its list of items to consider in the next session. The time has come to stop kicking the can down the road and dealing with the many complex issues of providing affordable insurance in the state.