Will the real rate reductions please stand up?

Article Courtesy of The Palm Beach Post

By Randy Diamond
Published July 8, 2007

Out-of state media are already writing stories slamming Florida’s property insurance plan as a failure.

Meanwhile, Florida’s governor and insurance commissioner have downplayed the fact that an average 15 percent reduction for homeowners is less than what was previously forecast.

The final verdict should come in about a month after Florida’s 190 or so property insurers file their so called “true-up” calculations. Those filings will show insurers true cost of buying reinsurance, or insurance for insurance companies.

The state’s insurance reform plan lowers rates by selling insurers discounted reinsurance. But the first five companies to make rate filings have canceled announced rate reductions and instead want to raise rates!

Then, there’s the matter of the Nationwide Insurance Co. which recently won a arbitration panel decision awarding it a 54 percent increase. The insurer is proposing a 4 percent rate discount off that increase as part of its reinsurance rate filing with regulators.

Of course, these filings have to be approved by Insurance Commissioner Kevin McCarty, who is promising a rigorous review.

It could all get very interesting, especially given the governor and insurance commissioner’s determination to bring lower rates to the state.