State Farm needs to make changes to protect policyholders
In Print: Wednesday, August 5, 2009
Changes needed to protect policyholders
The editorial criticizing State Farm for its recent rate filing to modify discounts for homeowners was off the mark. Insurers need to have adequate funds to pay customers’ claims. State Farm Florida’s filing will help ensure the company has enough cash to pay its claims if a major storm strikes this year or next and is not an effort to skirt the law. Filing to modify some of its discounts was an action State Farm was forced to take to ensure its solvency and protect policyholders.
But there are larger issues here. In order to protect Floridians, insurance policies should be supported by well-capitalized and trusted insurers rather than forcing homeowners to rely on emerging no-name companies or the destined-to-implode state-run Citizens Property Insurance. If disaster strikes, Floridians and the businesses that employ them will be left holding the bag to the tune of billions of dollars in assessments.
Associated Industries of Florida was an ardent advocate for the Consumer Choice Act (House Bill 1171), which would have helped to restore a competitive property insurance market to the state. Ultimately vetoed, this bill would have allowed consumers to decide if they wanted to pay premiums charged by financially strong insurers to assure their claim would be paid. Government shouldn’t make consumers’ choices for them — it’s the people’s money and they should spend it as they best see fit.
State Farm Florida’s filing is also about consumer choice. The Office of Insurance Regulation should approve the company’s filing so customers can decide for themselves if they want to keep their insurance with State Farm Florida or shop for other coverage.
Barney T. Bishop III, president and CEO, Associated Industries of Florida, Tallahassee