House panel okays bill to raise insurance rates

Article Courtesy of The St. Petersburg Times
Published  April 21, 2007

TALLAHASSEE - Private insurers would have an easier time getting rate increases and an effort would be launched to end competition from the state-created Citizens Property Insurance Corp. under a bill that cleared a House panel Friday.

The measure would counteract some of the legislation passed during a January special session that was designed to cut insurance rates that had soared after a series of destructive hurricanes in 2004-05.

"We need to have low premiums. However, they are unrealistically low," Rep. Alan Hays, R-Umatilla, told the House Jobs and Entrepreneurship Council.

Lobbyists for insurance companies and business interests lined up in support of Hays' bill (HB 1223), which he said would stop the artificial suppression of rates.

Another provision would create a 17-member task force, including eight members from the insurance industry, to develop a plan that would return Citizens Property Insurance to its original function as an insurer of last resort.

The council approved the bill 11-0. It next goes to the House Policy and Budget Council. A similar bill (SB 2366) has yet to get a committee hearing in the Senate.

The Legislature, urged on by Gov. Charlie Crist, decided in January to let Citizens compete with private insurers .

Unlike private companies, though, Citizens can make up for losses through assessments on all property and auto insurance policies sold in the state.

Florida Chamber of Commerce vice president David Daniel told the council his members would rather pay adequate premiums before a storm than assessments afterward.

Associated Industries President Barney Bishop said Floridians could be slapped with assessments ranging from $1,400 to $17,000 a year to bail out Citizens if the state has another hurricane season like it did in 2005. Businesses would pay 41 percent of those assessments, he said.

"Citizens is not the solution," Bishop told lawmakers. "It is the problem."