News & Updates


Fla. Cabinet balks at proposed auto insurance rule

By BILL KACZOR – Associated Press Writer

The three Florida Cabinet members, each a declared or potential candidate for governor, on Wednesday refused to block auto insurers from charging new policyholders higher premiums if they’ve been in accidents that weren’t their fault. 

At a meeting with the Cabinet, Gov. Charlie Crist moved to adopt a rule to prohibit such surcharges. None of the Cabinet members would second his motion. The three elected officials serve with Crist, a frequent insurance industry critic, on a panel overseeing insurance regulation.

It was the first Cabinet meeting since Crist, a Republican, announced on Tuesday he will run for the U.S. Senate next year instead of seeking re-election.

Industry representatives said surcharges for new customers with accidents on their records already are a common practice and are justified because such drivers pose a higher risk even if not at fault. They also argued that fault cannot always be determined.

State law prohibits insurers from raising premiums for current customers who have been in accidents they didn’t cause. Insurance Commissioner Kevin McCarty proposed the rule to extend the ban to new customers as well. He said he believes that’s what the Legislature intended because the law refers to "the insured" without making a distinction between new and current customers.

Brian Newman, a lawyer for the Florida Insurance Council, said that’s incorrect because the law doesn’t say anything about applicants.

But McCarty said there’s no need to.

"Insurers do not insure applicants," McCarty said. "Insurers insure policyholders. Applicants don’t pay premiums, policyholders pay premiums."

Newman and Liz Reynolds, Southeast state affairs manager for the National Association of Mutual Insurance Companies, told the panel insurers would simply refuse to write policies for applicants with accident records or charge higher rates for all new customers.

Reynolds asked if it was fair for those "with sweet, clean driving records" to pay the same as drivers with "unproven fault" records.

Attorney General Bill McCollum, a Republican who expects to declare his political plans in a few days, said he agreed with Reynolds’ argument because insurance companies cannot determine "whether or not you were truly the innocent victim." But the issue may come up again, McCollum said.

Agriculture Commissioner Charles Bronson, a Republican who has said he’d run for governor if Crist didn’t seek re-election, and Chief Financial Officer Alex Sink, a Democrat who announced her candidacy shortly after the Cabinet meeting, also declined to second Crist’s motion.

Sink, though, first asked McCarty if the Legislature could clarify the law. He said it could.

Even if lawmakers do nothing, McCarty said his interpretation may prevail through case law. That’s because he has rejected a proposal by Progressive Corp. to include a surcharge for new customers with not-at-fault accidents as part of a general rate case.

Progressive has appealed his decision to administrative law judge. The losing side in that case could take the issue to an appellate court and its ruling could set a legal precedent.