Crisis over high insurance rates continues

Article Courtesy of BayNews9
Published September 20, 2007


Usually Governor Charlie Crist is Mr. Cool and Collected.

But in a Cabinet meeting Wednesday, he let loose on the insurance industry.

Regulators said property insurers could be ripping customers off by not passing along savings guaranteed by new reforms.

"They have a legal duty to pass on the savings that have been brought to them by the Florida Legislature," Crist said. "By their great action during the special session in January of this year, the law says, according to general counsel, they must pass on those savings to the people, the consumers of the state, and it seems that a lot of them have failed to do so."

In January the prediction was companies would lower rates by an average of 24 percent. Today, the state finds the savings have only been half that, and in some cases, rates have gone up.

"The immediate thing is following through," insurance industry analyst Bob Hunter said.

Hunter stands by his original prediction, but says many companies aren't following the new law. Instead of buying their backup insurance by going to the state's expanded catastrophe fund, they're going to the more expensive private market.

He thinks he knows why.

"I think the big companies are concerned that other states not adopt these kinds of laws," Hunter said. "And they are willing to fight, in part because they want to keep the money, but in part because they don't want Georgia and Texas to adopt the same laws."

Industry heavyweights said that's wrong, and they're keeping their end of the bargain, cutting bills by $200 billion. Those bills come in two parts - hurricane coverage and windstorm.

"The savings they were promising, that 24 percent, would be on the hurricane portion of the premium," Greg Landry with the Florida Insurance Council said. "That equates to 12 percent, which is what is coming through at the presumed factor filings - 12 percent and higher.

Still not good enough for the governor, who's waiting to hear back from the companies on the hot seat.

"I can't wait to see the answers to your subpoenas," Crist said.

Regulators also said insurance companies may be collaborating with rating agencies that can threaten to downgrade their credit if rates fall too low. Many of those agencies are owned by insurer parent companies.