Florida Insurance Council backs off on

court challenge to cancellation ban

Article Courtesy of The Sun Sentinel

By Kathy Bushouse
Published  February 20, 2007

The Florida Insurance Council ended its legal challenge to an emergency state order that temporarily stops property insurers from dropping policies or raising premiums before provisions in Florida's new insurance law takes effect.

The insurance trade group stopped its fight because a new directive issued Monday by Insurance Commissioner Kevin McCarty clarified some of the group's questions so "we did not see a need to continue the legal challenge," said Sam Miller, executive vice president of the Florida Insurance Council.

The state's emergency order still prohibits insurers from raising rates and dropping customers before provisions of the new insurance law take effect June 1, but McCarty's order clarifies that insurers will be able to drop customers to reduce their hurricane exposure if certain conditions are met. Insurers will be able to jettison customers' property policies if they first file for lower rates with the state Office of Insurance Regulation and give their customers 100 days notice, according to the order.

All insurers are required by McCarty's order to file new rates with the state by March 15 and have them in effect by June 1. Property owners should expect to see savings when they renew their insurance policies, and some customers of Citizens Property Insurance Corp. will receive refund checks.

"The Florida Legislature's goal was to provide immediate rate relief for Floridians," McCarty said Monday in a statement. "The discounts to be included in these rate filings are a significant step in alleviating the financial burden on Florida's policyholders."

Last week, the insurance council challenged the emergency order approved Jan. 30 by Gov. Charlie Crist and the Florida Cabinet because the group contended the order was overly broad and overreaching. It filed its objections with both the First District Court of Appeal in Tallahassee and with the state's Department of Administrative Hearings, and both those challenges will be dropped, Miller said.

The news may not be as good for some customers of Allstate Floridian Insurance Co. Once the St. Petersburg-based insurer submits revised rates to state insurance officials, the company will be able to move ahead with already announced plans to drop 106,000 home and condo policies and offer customers new coverage with Royal Palm Insurance Co., a new insurance company in Ormond Beach.

"There was a lot of confusion out there before [McCarty's] order came out," said Allstate Floridian spokesman Adam Shores. "So to the extent that there is more clarification, we obviously think that is a good thing."