TALLAHASSEE — Florida's state-backed property insurer should be prohibited from selling policies to cover new construction or remodeling of existing homes in environmentally sensitive and high-risk coastal areas, a state lawmaker said.

Sen. Alan Hays, R-Umatilla, said the time has come to get Citizens Property Insurance Corp. — and many Florida residents, by extension — out of the business of insuring such high-risk properties.

“The people of Florida need the full truth about the extent of our property insurance dilemma,” Hays said. “We need to correct the errors of our previous years and start rebuilding the private insurance market.”

The dilemma he referred to is one that could cost private citizens billions of dollars in surcharges on their insurance policies if Citizens fails to meet its obligations in the wake of a major hurricane or a series of devastating storms.

Citizens, which was originally created as an insurer of last resort, is Florida's largest property insurer, with more than 1.2 million policies in force. But its total exposure of some $400 billion dramatically exceeds the company's present surplus of $4.5 billion and one major storm could bankrupt the company.

“Florida taxpayers already have enough challenges,” said Charles Pattison, president of 1000 Friends of Florida and one of several environmentalists on hand to support Hays' proposed amendment that would keep Citizens from selling new policies in the high-risk or environmentally sensitive areas.

Hays plans to add the prohibitions to a bill (SB 1714) that allows Citizens to increase residential policyholders' rates by 25 percent for any single policy, excluding coverage changes and surcharges. It also restricts who would be eligible to buy from Citizens but it does not affect existing coverages.

Sam Miller, executive vice president of the Florida Insurance Council, an industry group, applauded Hays' proposal which Hays said also has the backing of Gov. Rick Scott.

“We think Citizens should be made a lot smaller and that it should no longer compete with the private market when private insurers are willing to write,” Miller said. “You need to figure out what Citizens' appropriate role is and what it should be writing and make sure that it does that and no more.”

Citizens was created by the Legislature in 2002 to provide insurance to homeowners in high-risk areas and those who cannot find coverage in the private market. It was largely an offshoot of an underwriting association formed by the state in the aftermath of Hurricane Andrew in August 1992.