Florida needs more property insurance choices
By Bill Proctor
May 14, 2009
Insurance Commissioner Kevin McCarty’s assertions that Florida has "one of the most" competitive property insurance markets and easing rate regulation will not encourage private carriers to return to Florida, are both open to serious question. If that were true why are so many companies restricting their writings or leaving our state altogether? Why can’t a homeowner purchase a policy from a licensed company of choice at a market regulated rate?
Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund may not have sufficient capital to pay their claims after a hurricane, resulting in Floridians being required to pay thousands of dollars in state assessments.
Small, start-up property insurers may not be standing after a major storm. These are the circumstances that give impetus to the legislation I sponsored this spring. House Bill 1171 provides consumers more options in purchasing homeowners insurance. The bill passed overwhelmingly in the Florida Legislature and is on Gov. Crist’s desk.
This bill would allow a narrowly-defined group of large, well-known, and financially strong insurers to offer policies at market-based, actuarially sound rates. Consumers would be able to choose to have their home insured by a company they know provides good customer service and has capital to pay their hurricane claims.
The bill includes important consumer protections to make sure consumers know exactly what they are buying if they choose one of these free market policies, including side-by-side rate comparisons.
If price regulation is the solution to assuring consumer choice, why is Florida having so much trouble generating real competition in its dysfunctional homeowners’ market? Why are there so many small, private insurers facing questions about their basic ability to pay claims? Why not permit consumers to decide what they’re willing to pay for peace of mind? If the price is too high, consumers will reject the offer or fire the insurer — if the price is right, they’ll hire them.
A truly competitive homeowners’ market is based on consumers having choices among many private insurers. A financially stable market is based on having a healthy mix of large, medium and smaller companies that contribute private claims-paying capital.
Bill Proctor is from St. Augustine and is a member of the Florida House of Representatives.