Lawmakers seek to bring large insurers to state
Bill allows unregulated home policies
By Julie Patel | South Florida Sun-Sentinel
April 23, 2009
The state House of Representatives passed a property insurance measure Wednesday that would allow large insurers to sell essentially unregulated home and condominium insurance policies at whatever price they want.
Lawmakers say the bill would lure insurers to the state and allow people to choose a pricier policy from a more experienced insurer.
The full House and Senate would have to approve the bill for Gov. Charlie Crist to consider signing it into law. The Senate’s version is stuck in a committee for now. There are other moves to roll back property insurance regulation in a broad measure the House and Senate are expected to debate today.
Those bills, among other things, would allow state-backed Citizens Property Insurance to gradually increase rates and would phase out a portion of the Florida Hurricane Catastrophe Fund, which sells cheaper backup coverage to insurers so they can pass the savings to consumers.
Under the House bill approved Wednesday by a 105-13 tally, the state still would be able to deny a rate request if the premium is too low — and would undercut regulated rates — and is deemed calculated in an "unlawful" manner. And it would require insurers selling the unregulated policies to provide estimates for similar policies from at least one other insurer.
"Let’s treat our constituents like adults and allow them to choose the carrier they prefer," said Rep. Peter Nehr, R-Tarpon Springs.
Waldo Faura of Miami said the choice seems obvious.
"I really don’t know anyone who is going to be willing to pay more for property insurance," said Faura, co-founder of consumer group Floridians In Action, which pushed for sweeping property insurance legislation in 2007 to reduce home insurance rates after they doubled or tripled in some cases after the 2004 and 2005 hurricanes.
House Democratic Leader Franklin Sands said he has concerns with the bill.
"There’s nothing in this bill that prevents a company from charging rates that are much higher than actuarially sound rates," Sands, D-Weston, said before the vote. "Each company has a mission of maximizing their profit."
Lawmakers removed a provision in the bill that would have exempted homeowners buying the unregulated policies from paying annual fees to offset Citizens’ deficits. Insurers selling the policies must have at least $500 million in reserves or $200 million in reserves and at least $1 in surplus for every $2 in premiums they collect. About 70 insurance companies statewide have at least $500 million in reserves and more than 200 others meet the other qualifications, according to Office of Insurance Regulation spokesman Ed Domansky.
Some lawmakers say they decided to vote for it because it would help bring large property insurers to Florida.
State Farm, the state’s largest property insurer, announced earlier this year it’s leaving Florida’s property insurance market because it said the money it’s collecting in premiums isn’t keeping pace with claims and other expenses.
State Farm spokesman Chris Neal said it’s unclear if the bill would keep State Farm in Florida, but the company would consider it if there’s "a permanent and transformational" change in the property insurance market.
"Obviously for State Farm to even reconsider its business decision, [the market] has to be stable and reforms have to be permanent," Neal said. "I don’t know if this meets the definition of transformational or not."
Julie Patel can be reached at 954-356-4667 or firstname.lastname@example.org.