panel urges tough legislation on Florida property insurers
changes target rate hikes, dropped policies
Article Courtesy of The Sun Sentinel
Published March 14, 2008
special Senate panel that grilled insurers last month about how rates are
set proposed sweeping property insurance changes on Thursday.
Sen. Jeff Atwater, R- North Palm Beach, and Sen. Steve Geller, D- Cooper
City, announced 16 recommendations from the Select Committee on Property
Insurance Accountability, which was formed earlier this year to
investigate why insurance rates have not declined as much as expected in
response to massive property insurance changes last year.
|The proposals, some
already filed as bills, include raising penalties for insurers
that violate state laws and holding the industry accountable
to state anti-trust laws. Most of the ideas build on last
year's changes or close loopholes that became apparent during
the February hearings.
"This legislation represents the first steps in a real
homeowner's bill of rights when it comes to property insurance
in Florida," Atwater said in a statement Thursday.
"Changes in insurance are coming, and they are coming
It's unclear how far the proposals will go, as legislators are
intensely focused on the budget.
Even Geller concedes some of the recommendations are
Jeff Atwater, R-Palm Beach Gardens (left) and Sen. Steven Geller, D-Hallendale
Beach, co-chairs of the insurance regulation committee.
is too big a package in my mind to pass," he said Thursday. "But
if we can get half of it, I'll be very happy."
The recommendations come as the House insurance committee on Thursday
approved a bill, HB 983, which would undo some of the changes passed last
year. The proposed legislation, for example, would cut the state's
hurricane catastrophe fund, after legislators last year voted to expand
Insurance industry representatives say the changes may have the unintended
consequence of driving more companies out of Florida, which they already
consider hostile to the industry. The recommendations ... fly counter to
so-far successful efforts by the state to attract new insurers to
Florida," said Sam Miller, executive vice president of the Florida
The recommendations culminate months of battles between the state and
insurers over rates. In December, Gov. Charlie Crist recruited a team of
attorneys to explore suing insurers over rates. The next month, Insurance
Commissioner Kevin McCarty briefly suspended Allstate Insurance Co. and
nine affiliates from doing business in the state; the ban is now pending
an appeals court decision. And last month the special Senate committee
held three days of hearings to explore why insurers haven't passed savings
on to consumers.
"It looks pretty bleak right now," said Mark Delegal, a lobbyist
for State Farm, which informed regulators last month that it would
essentially stop selling new homeowners policies in the state. "You
can make all the rules in the world and business will find a way to
survive around them or they'll die."
Atwater said the February hearings demonstrated that insurers were in fact
"finding loopholes or ways around laws," such as setting rates
based on excessive profit margins and unapproved methods of predicting
risk. While the special Senate committee did not vote on a list of
proposals, some of the bills Atwater and Geller recommended to Senate
President Ken Pruitt on Thursday would:
• Allow regulators to block rate hikes and bar insurers from
using arbitrators if they disagree.
• Prohibit insurers from buying more reinsurance, or backup
coverage, than they need.
• Require insurers to use risk prediction methods that are
approved by the state when calculating rates
• Allow regulators to establish guidelines on what are
considered excessive profit margins, a factor insurers use to set rates.
• Impose a moratorium on insurers dropping policies after a
Senator Bill Posey, chairman of the Banking and Insurance committee, said
he supports most of the reforms, and Pruitt vowed in his opening statement
to the Senate to "move aggressively forward" on insurance
"We are going to keep the pressure on, we will continue to get
answers, and we will change the law if needed to ensure that consumers in
Florida get the rate reductions that we intended for them," Pruitt
said last week at the kickoff of the legislative session.
On the other side of the Capitol, proposals backed by key leaders such as
House Speaker Marco Rubio, R- West Miami, focus less on rate relief than
on saving consumers money later, if major hurricanes strike, wipe out
state insurance funds and leave Florida residents to foot the bill.
Ideas that have bipartisan support include loans, grants and sales tax
exemptions to help consumers hurricane-proof their homes and loans to
small insurers to help them grow to replace some of the major companies
retreating from Florida.
More than 219,000 homeowner policies with Allstate Floridian, State Farm
Florida and Nationwide or their affiliates were canceled or not renewed
last year, according to reports from the Office of Insurance Regulation.