By William Rabb

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Citizens Property Insurance Corp. officials have spoken extensively about the need to depopulate the insurer’s rolls and reduce its dramatic growth rate, and the measures Florida lawmakers can take to help with that.

Ideas discussed in recent months include allowing Citizens, the state-backed property insurer of last resort, to raise premiums more than what the statutory 10% annual cap now provides; and to bar policyholders from sticking with Citizens if a private insurer will write the policy at premiums that are up to 20% higher.

At the Florida Chamber of Commerce Insurance Summit last week in Tampa, Citizens’ chief of legislative and external affairs underscored those legislative goals but also threw out a few other ideas – ideas that are sure to ruffle the feathers of snowbirds who own thousands of second homes in the Sunshine State.

Christine Ashburn

“One idea has been, ‘Why don’t you get rid of the rate cap on second homes?’” Citizens’ Christine Ashburn said at a summit panel.

Such a plan is workable, but in some cases, Citizens’ rates need to be adjusted downward for a number of reasons, she said. So, a concept, endorsed in a bill sponsored last year by state Sen. Jeff Brandes, R-St. Petersburg, is to place a 20% surcharge on policies for homes that are not primary residences.

Brandes, chair of the Senate Governmental Oversight and Accountability Committee, and others have spoken out about the inequity of Florida taxpayers subsidizing second homes for wealthy people who reside out of state most of the year.

Ashburn noted that about 33% of Citizens’ policies — some 208,000 — are for non-primary residences. And about 8% or 59,000 policyholders reside outside Florida for much of the year. Roughly 2% are foreign nationals, mostly Canadians, who are often referred to as “snowbirds” when they flock to Florida at the beginning of winter.

“I think there is some discussion about, ‘Should we make it available to non-U.S. citizens at all,” she said.

One drawback to a foreigner tax is that some Florida owners may have out-of-state mailing addresses and could face the surcharge unfairly. Another concern is that a second-home surcharge would also hit renters who can’t afford to buy homes in a pricey market. The landlord will probably pass the fee on in the form of higher rents.

“That is a risk that is maybe worth taking. I don’t know,” Ashburn said. A surcharge would be “easy to implement; it’s a disincentive. It probably makes them more attractive for depopulation,” Ashburn said.

Michael Carlson, president of the Personal Insurance Federation of Florida, said a surcharge might also be opposed by tourism officials, real estate agents and their snowbird clientele, who have enjoyed lower Citizens’ rates through the years.

“But I think it’s a good concept that’s worthy of discussion, so I hope they’ll take that up,” he said.

Another idea that Citizens’ chairman has floated recently is letting policyholders of an insolvent carrier to remain at the carrier’s higher premium when they are moved to Citizens. Citizens’ policy premiums are often significantly lower than private insurers in some parts of the state.

When Florida Specialty Insurance Co. went under in 2019, for example, some homeowners were paying $3,000 in premiums, about $500 more than Citizens charged for a comparable policy, Ashburn said.

“If that person was comfortable paying $3,000, why should they get a discount to come to Citizens,” she said. “It makes some sense, but we’re not sure if the juice is worth the squeeze on that.”

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