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Two Florida Legislators Revive Deregulation Bill

Two Florida Legislators Revive Deregulation Bill

During the 2009 Legislative session Representative Bill Proctor, R-St. Augustine and Sen. Mike Bennett, R-Bradenton guided a “deregulation bill” through the Florida Legislature.  The bill would have permitted many large insurers to offer homeowners insurance policies at rates that exceeded the approved rates they had on file.  To be eligible for this reduced rate regulation, insurers had to have large surpluses available.  Governor Charlie Crist vetoed that bill.   The veto produced a storm of controversy as Senator Bennett especially criticized the Office of Insurance Regulation for providing what he believed to be incomplete information to the Governor that helped convince the Governor to veto the bill. 

Representative Proctor and Senator Bennett announced at a press conference on December 8, 2009 that they have revised the bill to be applicable to all admitted carriers and intended to file it for consideration during the 2010 session (see HB 447).  The release announcing the filing stated that the “‘Consumer Choice homeowners’ insurance bill, which would allow consumers to decide for themselves if they want to have their home protected by a private insurer offering market-based rates, has been revised and re-filed for the Spring 2010 annual session.  ‘The new version of the bill has been retooled to address the continuing erosion of the competitive private market,’ said Senator Mike Bennett, R-Bradenton.”

The bill would permit an insurer to use a rate “different from” the rate otherwise filed under section 627.062.  The insurer must submit a filing under section 627.062(2)(l), Florida Statutes.  Such filings could be disapproved for including a rate that is inadequate or which results in a rate that charges any insured or applicant a higher premium solely because of the insured’s or applicant’s race, color, creed, marital status, sex, or national origin.  However, so long as the insurer complies with section 627.7031, Florida Statutes, the required filing is not subject to rate review for being excessive. 

To comply with section 627.7031, and therefore be eligible to make such a filing, the insurer must be offering a residential homeowners policy that includes the peril of wind and must make the disclosures required by the statute, including a notice that the policyholder may be able to buy insurance from Citizens Property Insurance Corporation.  An insurer offering such policies may not purchase coverage from the Florida Hurricane Catastrophe Fund under the temporary increase in coverage limit option under s. 215.555(17).  Unlike last year’s bill, this one contains no minimum surplus requirements as last year’s did. 

The bill also contains language that clarifies that the Citizens policyholder surcharge (15% of premium) should begin immediately upon issuance of an order levying the assessment.  The assessment should apply to the initial issuance of a policy within the first 12 months after the date of the order and should be payable upon any cancellation or termination of a policy, upon renewal of the policy, or upon issuance of a new policy within the first 12 months after the date of the levy.  The bill also makes the levy of an assessment on Citizens policyholders a precondition to levying an assessment on the general market.

Sen. Bennett said the purpose of the bill is to attract as much capital and as many new companies to Florida as possible.  He said we should “trust the consumer.”  If a consumer is willing to pay a little more to keep a particular company and a particular agent, they should be allowed to do so.  The Senate version of the bill (SB 876) was filed on December 9, 2009.