Homeowners insurance deregulation on way
April 15, 2009
House bill would allow rate increases
By PAUL FLEMMING
The News-Press Capital Bureau
TALLAHASSEE — Well-financed insurance companies like State Farm Florida would be allowed to offer policies with unregulated rates under a proposal headed for the floor of the Florida House.
The bill also would allow well-financed insurance companies to be exempt from extra charges if the state-run insurance company runs short of money to cover claims. The proposal, sponsored by Rep. Bill Proctor, was approved by its last House committee Tuesday and now heads for the full chamber. A similar bill has one committee to go through before reaching the Senate floor.
State Farm Florida, the state’s largest private property insurer, last year was denied a requested 47 percent rate increase and is pulling out of the state, dropping its 1.2 million property policies by 2011. In Lee County, State Farm has 38,508 policies, including 27,324 for houses and 8,032 for condos.
Gloria Gertzen, who has used State Farm for home and auto coverage for a bit more than 25 years — first for a condo on Fort Myers Beach for and her husband, Joseph, and now on a home in North Fort Myers, said she doesn’t like what’s going on.
“I told my agent it’s all or nothing,” Gertzen said when it came to higher rates.
“The last increase almost broke us. I’ve already started getting estimates from other people and asking friends about other companies.”
It was 1950 when Bill Brown, 83, of Estero said he took out his first homeowner’s policy with State Farm in Missouri. But even after such a long history with the company, Brown said he is unsympathetic with the bill if it allows State Farm to raise rates.
“When I moved, they provided (insurance) only because I was such a good customer. There’s nothing new about this,” Brown said.
Jacqueline Centalonza, 65, has lived in her Fort Myers home about six and a half years using Allstate. While she said the company’s homeowners insurance isn’t bad she finds the rates for her car outrageous.
"I’m definitely against deregulation," Centalonza said. "Just seeing what’s happened with the banks and the economy, it’s just getting out of hand."
Centalonza said she understands the need for competition, variety and choices. But she fears the interests of customers will not be protected if larger insurance companies are given that kind of freedom.
Mark DeLegal, a lobbyist for State Farm, said the company is not saying whether it would sell the unregulated policies but favors a change in regulations.
"We’re interested in seeing transformative change" in how rates are approved, DeLegal said.
Under the proposal, the state would still govern property insurance except for top-end rates.
State Farm is not the only company that could offer the policies. An Office of Insurance Regulation representative said its analysts concluded there are many companies that would meet the capitalization requirements to sell policies.
State-run Citizens Property Insurance Corp., now the state’s largest property insurer with 1.1 million homeowners policies, has had rates frozen by the Legislature since 2007. If Citizens has a deficit it can add up to 45 percent on top of premiums to Citizens customers to make up the difference. If that doesn’t cover its losses, all private insurance customers can be assessed up to 18 percent to cover the losses.
A consumer "can make the choice to purchase property insurance without great restrictions, but with the understanding he would not be subject to assessments at the end of an event," said Proctor, a St. Augustine Republican.
"I do believe there is some desire for consumer choice," Proctor said. "If I know what the price of my policy is and I’m not vulnerable to assessment, I know what my entire cost is. I’d rather know the price up front."