News & Updates


Let homeowners choose and market work

Editorial: Insurance choice
May 10, 2009 

Florida has been living in a dream world, in which a little imagination and a lot of regulation bring underpriced property insurance to a state that juts out into the warm, hurricane-spawning waters of the Gulf and Atlantic. 

About 1.2 million State Farm policyholders woke up from that dream in January, when the company said it was pulling out of Florida, after being denied a 47-percent rate increase.

Gov. Charlie Crist — who presumably would like to make his run for the U.S. Senate as the man who lowered property taxes and insurance rates — said "good riddance" to State Farm. But that was little comfort to homeowners left shopping for new insurers and often finding rates higher than that 47 percent — if they could find insurance at all.

Enter the Consumer Choice Bill (aka the Save State Farm Bill).

The bill, passed by the House and Senate (HB 1171 and SB 2036) and on its way to Gov. Crist’s desk, would deregulate rates for the state’s largest insurers and let them charge what the market will bear. The bill recognizes that the free market can be a wonderful thing and that sometimes people will pay more for service and security and to maintain a long-term business relationship.

Early speculation is that Gov. Crist will veto the bill. And Insurance Commissioner Kevin McCarty — who Sen. Mike Bennett, R-Bradenton, said helped him craft details of the bill before making a late and surprising switch to oppose it — said the Consumer Choice Bill "will very likely yield substantial and unpredictable rate increases."

But there is much to recommend it:

Getting a policy from a company with unregulated rates is purely voluntary. BMWs and a Chevrolets have four wheels and meet all safety and emission standards, but why should government tell consumers they can’t pay more for the BMW?

Insurers still would be regulated in all other aspects of the business, such as being financially sound and nondiscriminatory. Only the rates would be freed up.

Consumers could shop and compare prices at the state Office of Insurance Regulation’s Web site and through agent information.

Citizens Property Insurance Corp., the state’s "insurer of last resort" that has become the state’s largest homeowners’ insurer, is "sitting out there hanging on a hope and a prayer," as Mr. Bennett put it. Citizens is financially unsound, lacking the money to cover potential claims from a major disaster, and if this consumer-choice bill can keep insurers in the state and attract more competition, it would ease that burden.

The bill affects only the biggest 20 or so insurers. Homeowners still could shop among numerous smaller in-state insurers with regulated rates.

There’s no guarantee that this bill would keep State Farm from leaving Florida after 60 years of writing insurance here, or that it would encourage other insurers to write more policies. But where’s the risk? State Farm already is leaving and insurers already are limiting what they write in Florida.

It’s almost certain that some rates will go up, but again, that’s the case already for State Farm policyholders looking for a place to land — and ultimately rates will rise in a state so vulnerable to natural disasters.

Mr. Bennett met with Gov. Crist on Friday morning to try once more to convince him of the bill’s worth. The governor should shake off his preconceived notions, sign this bill and let the marketplace do its work.

The "people’s governor" should let the people make the decision about who will insure their homes and what they’re willing to pay.