Insurance Rate De-Reg Redux Advances

By: Michael Peltier, The News Service of Florida
By: Michael Peltier, The News Service of Florida

THE CAPITAL, TALLAHASSEE, March 16, 2011 --

Returning to a debate that featured prominently in the legislative agenda last year, a Senate committee on Wednesday approved a measure to allow insurers to raise individual rates by up to 30 percent a year without state approval.

By a 6-3 vote, the Senate Banking and Insurance Committee approved a measure (SB 1330) that allows property insurers to raise the statewide average premium by 15 percent per year under a measure that mirrors an effort vetoed last year by Gov. Charlie Crist.

“It’s a consumer choice bill that can be a vital part of the re-establishment of a private market in this state,” Rep. Alan Hays, R-Umatilla and sponsor of the bill, told committee members before the vote.

Backers say the measure is part of a series of changes they say would help restore the private insurance market by reducing some of the cost drivers and allowing companies to raise rates they say are artificially low.

The proposal would prohibit the Office of Insurance Regulation from denying a rate hike of up to 15 percent – as a statewide average - for being excessive. Individual rates could be increased by up to twice the amount of the statewide average increase, again without OIR approval.

A House version (HB 885), sponsored by Rep. John Wood, R-Winter Haven, has yet to be scheduled for a hearing in that chamber.

Critics of the plan say the industry is crying wolf by claiming losses when there have been no significant storms in the past several years. They also say consumers will be forced to pay higher premiums or be transferred into Citizens Property Insurance Corp., the state-run property insurer that now covers 1.2 million policyholders, the most of any single company.

“This is a complete deregulation bill,” said Gary Farmer, a lobbyist for the Florida Justice Association, which opposes the idea. “(OIR) would lose the ability to reject a rate as being excessive.”

The bill is the latest in a trio of measures introduce this session that attempts to make changes to the property insurance market following the veto last year of SB 2044, which included several of the same ideas. This year, backers split the measure into separate bills.

Another measure (SB 408) also makes a number of changes first proposed last year. It allows insurers to pay actual cash value of property up front and to pay more generous replacement costs after repairs or replacement has been made. The bill also reduces from 180 days to 90 days the length of time an insurer must give policyholders after notifying them their policy is not being renewed.

The most controversial element of SB 408 would allow companies to drop sinkhole coverage and instead be required to offer catastrophic ground collapse coverage and pay up only if the sinkhole renders a home uninhabitable.

Business groups have targeted the insurance issue as one of their top priorities. Despite the absence of hurricane damage over the past several years, some insurers have gone out of business, a combination of lackluster investment returns and non-hurricane losses.

“What we’re doing right now is not working,” said Sen. Ellyn Bogdanoff, R-Fort Lauderdale, on Wednesday before the vote. “We owe it to ourselves to see if it will work.”

Opponents on Wednesday said deregulating rates is an untested attempt to strengthen a market that has already jettisoned its riskiest policies to Citizens, which they contend will grow if the bill is ultimately approved.

“I would like to see a free market system on everything we do,” said Sen. Eleanor Sobel, D-Hollywood. “But this is a statewide experiment. I think there will be a lot of disgruntled people across the state of Florida.”


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  • by Bob Location: Jasper on Mar 17, 2011 at 05:51 PM
    My insurance company values my house at $110,000 (that's the building only) but the last appraisal was about $50,000 including land. I pay insurance on $110,000 even though that's about 3 times my mortgage. I have no choice, either the 110 or nothing. How about a law that lets me buy (and everyone) the amount of insurance I want, not what the company thinks I should have?
  • by Gwinn Location: 32346 on Mar 17, 2011 at 03:41 PM
    Who voted for this ridiculous bill? Put that on the news and I promise they won't be re elected! Most staes regulate insurance rates by the claims loss rates. This is against the law to give insurance companies this much power. Insurance rates keep going up despite no losses, no severe storms or hurricanes. This is causing people of all ages to walk away from their homes and mortgages. We're being punished for working hard, buying homes and paying our taxes all these years. This will cause many seniors to lose their homes. Our incomes are not going up and we have no way of getting a job at our age. This is history repeating itself. The white men came in and changed the laws of the land and forced the indians off their lands or bought them out with pennies on the dollars. Isn't it funny how many wives work for local insurance companies and yet their husbands are local "contractors" or "developers"? Talk about insider information... Law makers you have opened the road for AIG, who writes a lot of flood insurance in this area ,to take over the state of Florida. We have already gave them billions in "Bail Out" monies. Now we're being asked to give them our homes.
  • by Frank Location: Sarasota on Mar 17, 2011 at 12:45 PM
    How is that creating JOBS? Where are all the people screaming at unions? We ALL pay insurance and how hard is it to get a payout? Not everyone belonged to a union and yet the right wants to abolish them. Hey Republicans! Your pals are allowing insurance companies to raise your rates 30% a year, every year. Where's the outrage? Insurance companies are parasites. Remember when they made record profits during Katrina and paid next to nothing out? You want to keep paying 30% more so they can deny you coverage? WHERE'S THE OUTRAGE!!!!! Hypocrates.
  • by TaylorMom Location: Perry on Mar 17, 2011 at 10:06 AM
    Insurance Companies just want to take our money and avoid ANY payout. I have never made a claim and still my House insurance goes up. About $200 this renewal cycle.
  • by Bud Location: Leon Co on Mar 17, 2011 at 09:09 AM
    I remember gas deregulation,this will have the same results.Fatcats hire lobbiests and get richer.I am ashamed to be registered Republican.
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