Editorial: Don’t blow away homeowner insurance discounts in Florida
Wednesday, August 19, 2009
After 2004’s devastating hurricanes and the hefty rate hikes that followed, insurance companies began offering hefty discounts to homeowners who armored their dwellings with storm shutters, reinforced garage doors and the like.
The discounts, which state regulators doubled in 2006, have become wildly popular — so popular, in fact, that insurers now want them scaled back.
Leading the charge is State Farm, which recently was denied a rate increase in Tallahassee and announced it intends to quit writing homeowner policies in the state. State Farm’s lame-duck status notwithstanding, state officials say they will review the discount program.
A hard look seems to be in order. The Florida Association of Insurance Agents released a report last week alleging “misconduct by inspectors, insurance companies, agents and homeowners; all of whom either give, accept or intentionally overlook ‘false’ inspection reports used to verify a home’s wind mitigation characteristics, such as storm shutters.”
The association wants the state to create uniform standards for inspectors and weed out “retail-level fraud.”
What’s extra scary about this is that some homeowners paid to get inspections done by consultants tapped by their own insurance companies. Other inspections — 400,000 — were done by state-sanctioned inspectors. Those inspections led to 35,000 armoring grants paid by the state to homeowners under the My Safe Florida Home program.
Whether protective measures merit premium discounts of up to 30 percent may be debatable, but this is something the industry itself lobbied for. Yet there can be no argument that if fraudulent behavior exists, it must be aggressively rooted out.
And that’s where the Legislature must draw a reasonable distinction. Arbitrarily reducing promised consumer discounts would be an exercise in bad faith. As state Sen. Mike Fasano told the Orlando Sentinel:
“This is what (the insurance companies) wanted and this is what they got. Now they want to take away the discounts from homeowners. That’s a promise they’ve broken.”
Insurance companies have a vested interest in ensuring that the discount program is both equitable and efficient. Instead of asking the state to peel back worthwhile incentives, the industry should first work with regulators to strengthen the integrity of a system that sensibly encourages Floridians to safeguard their properties.