News & Updates


Chief Financial Officer Split on Insurance Rates

Alex Sink backs raising rates for Citizens but is unsure of eliminating rate caps.

Published: Wednesday, May 6, 2009 at 10:46 p.m.
Last Modified: Wednesday, May 6, 2009 at 10:46 p.m. 

SARASOTA | Florida’s elected Chief Financial Officer Alex Sink supports raising rates for policy owners with state-backed Citizens Property Insurance Corp., but is hesitant to support a bill to eliminate rate caps on big private insurance companies.

Sink, a Democrat, said while she understands the motive to get more insurance companies writing policies in Florida, there is no evidence to suggest companies like State Farm – which announced it would leave Florida after it had a 47 percent rate increased denied – will stay if Gov. Charlie Crist signs the bill into law.

"Does this even keep State Farm in Florida? Or is it just an opportunity for other big companies to come in here and be deregulated?" asked Sink, who was in Sarasota on Wednesday for a private campaign fundraiser and to speak to the Sarasota Civic League.

But do not expect to hear Sink call on Crist, a Republican, to veto the legislation that consumer groups fear will result in excessive rates for homeowners.

"It’s a decision for the governor to make," said Sink, who overseas the office of the Insurance Consumer Advocate.

"There are positives and negatives about the bill."

10 PERCENT a year

Sink is more convinced that legislation to allow Citizens to raise its rates 10 percent a year is the right move.

(Citizens Property Insurance Corporation had more than 10,500 active policyholders in Polk County at the end of 2008, according to the most recent data from the Florida Office of Insurance Regulation. That made Citizens the second-largest insurer in Polk behind State Farm. According to the Florida Office of Insurance Regulation, State Farm has some 47,000 property policyholders in Polk County.)

Sink said all homeowners are subsidizing Citizens by as much as 40 percent because the state-funded agency is not charging its customers enough. If there is a big storm, she said, Citizens would likely be in a deficit, forcing taxpayers to cover what Citizens cannot.

"At some point their rates will be what we call actuarially sound," Sink said.

The Legislature passed both insurance bills in the closing hours of the annual spring session last week. Both are now headed to the governor for his approval. Crist is expected to sign the Citizens rate increase, but has said the other bill gives him "some pause."

getting a ’bad rap’

The bill to allow larger insurers to raise rates with no input from the government is getting a bad rap, said State Sen. Mike Bennett, R-Bradenton, who sponsored the bill in the Senate.

Bennett, who calls it the consumer choice bill, said in an interview Wednesday that though rates will go up for people with policies from big carriers, in many cases they will still be less than Citizens.

"You’re telling me I’m paying a $1,000 a year for my insurance, and you won’t let State Farm charge me $1,500 but you will let Citizens charge me $3,000?" Bennett said.

And even if the larger provider is more expensive, Bennett said consumers deserve a chance to take the higher rate from a trusted national brand if they want rather than be forced to take a policy from Citizens, a company that they may not have as much faith in.

Bennett said there are protections in the legislation to prevent price gouging. He said the large insurers would have to tell homeowners that their rates will not be regulated and direct them to a state Web site where they can compare rates with other companies.

Bennett said he is not sure what Crist will do but is seeking a meeting with him this week to find out.

Sink, 61, is considered a top candidate to run for governor if Crist opts to run for the U.S. Senate. Crist has said he would decide his future after the Legislature’s session ends.

Sink said she thinks Crist will make an announcement next week.

Sink is one of just two statewide elected Democrats. She defeated former Florida Senate President Tom Lee, a Republican, 54 percent to 46 percent, in 2006.

[ Jeremy Wallace writes for the Sarasota Herald-Tribune. ]