Michael Peltier: State Farm gets backing from legislators
By MICHAEL PELTIER (Contact)
4:53 p.m., Sunday, March 29, 2009
TALLAHASSEE — Shot down in its bid to raise insurance rates earlier this year, State Farm Insurance Co. announced in January it was pulling out of the state.
Yet two months after being denied higher rates, State Farm has taken its case to the Legislature for the right to charge what it wants without state oversight. Far fetched? Hardly. Seems like more than a few lawmakers agree.
Last week, a House committee adopted a proposal that would clip the regulatory wings of the Office of Insurance Regulation, which has been duking it out with the state’s largest private insurer since January, when it denied State Farm’s 47 percent premium increase.
Sponsored by Rep. Bill Proctor, R-St. Augustine, the measure would allow the company and other large insurers to charge the rates they want. They would also be allowed to offer policies outside the realm of those required to pay assessments to Citizens Property Insurance Corp. in the event of a storm. The pool now totals $36 billion in assets, which is used as collateral to sell bonds to pay for storm damage.
Insurance regulators say the measure, if approved, could lead to an exodus of more affluent policyholders from state-run Citizens, Florida’s largest property insurer. Such a shift, they say, could make it more difficult for Citizens to raise money following a storm and more expensive for those policyholders left behind.
State Farm counters that even if it raises rates, they would still be cheaper than Citizens in many cases. Company agents submitted hundreds of comparisons backing up their claims.
“That’s the frustration,” said State Farm lobbyist Mark Delegal.
State Farm has been the target of much regulatory attention over the past few years as it has gone head-to-head with state officials over premiums and how it and other companies assess risk. Upon hearing of the company’s decision to not renew property policies after its rate hike was denied, Gov. Charlie Crist said good riddance.
But others have emerged saying the industry is going in the wrong direction if yet another private company bails out. With the state’s own insurance option on financially thin ice, more competition, not less, is needed. If policyholders want to pay more to stay with a national company, why not let them do it.
“This bill removes a significant amount of the mystery,” co-sponsor Rep. John Wood, R-Winter Haven, told members. “(Policyholders in the Citizen’s pool) have no idea what they are going to have to pay. This goes a long way to shining the light on the whole picture.”
Despite its unanimous vote Friday, the bill’s sponsor admitted the measure has a dim chance of success this session as the state scrambles to shore up Citizens. House co-sponsor Proctor, however, says the mere discussion of the issue is of benefit as the state tries to shore up its hurricane coverage that now sits on precarious ground.
“I filed this bill to have just this kind of debate,” Proctor said.
E-mail Michael Peltier at mpeltier1234@comcast.net