Florida Senate: Insurance execs must explain rates

A state Senate committee will question insurance executives on why expected rate cuts haven't turned up as expected.

Article Courtesy of The Miami Herald

Published January 12, 2008

Insurance company executives will be called to testify next month before a special Senate committee to explain why expected rate cuts haven't materialized.

The Senate as well as the governor and many homeowners are miffed that consumers aren't yet seeing the promised savings -- based on lower back-up insurance provided by the state. The savings were required by a massive insurance reform bill passed last January.

Insurance execs will be invited to testify Feb. 4 and 5. Those that don't comply could be subpoenaed by the committee.

''We don't want to hear from the local lobbyists or lawyers,'' said Sen. Steve Geller, D-Hallandale Beach, who will co-chair this committee with Jeff Atwater, R-North Palm Beach. "If we subpoena State Farm, I want Mr. Farm. If it's Allstate, I want Mr. State. At Geico, we want the lizard.''

A report from the Office of Insurance Regulation released Tuesday indicated that 32 companies filed for a rate reduction, but they represent just 17 percent of the market. OIR has rejected 31 filings that cover about 1.3 million homeowners where insurers were asking for rate hikes. Twenty-four filings are still pending.


Insurers told the Legislature that escalating reinsurance costs after the eight hurricanes of 2004 and 2005 was the reason for higher rates. So lawmakers expanded the state's hurricane catastrophe fund so insurers could buy lower-cost back-up insurance.

''The law is very clear in House Bill 1A. We take on the risk'' and insurers were supposed to reflect the savings in their rate filings, Atwater said. The special session bill also required top executives to sign off on their rate filings, verifying accuracy.

The senators believe the criminal penalty of perjury could provide details they haven't seen before.

''That kind of penalty brings compliance, which is to pass on the savings to policyholders,'' said Atwater.


Sen. Alex Villalobos, R-Miami, will be a vice-chair for this committee. ''It was only when we put people under oath during the medical malpractice reform sessions that we finally got straight answers,'' Villalobos said.

Sam Miller with the Florida Insurance Council said insurers in Florida have always abided by the state statutes. Not only are they bound by the bill passed during last year's special session but also by Florida's insurance code, which Miller calls one of the toughest in the country.