News & Updates


Deregulation pushed by insurance advocates


With the 2010 Florida legislative session looming, insurance industry advocates Wednesday stepped up their call for deregulating the residential property insurance market.

Instead of Citizens Insurance, the state-backed insurer of last resort, “becoming the preferred market” for many, the free market should be allowed to regulate rates and give consumers more choices, said Bill Gunter, former Florida insurance commissioner and chairman of the Florida Association of Insurance Agents.

Florida needs “a viable, competitive marketplace” for insurance, one that will encourage more private carriers to come back into the state, said Jeff Grady, president of the group, along with Walter Dartland, executive director of Consumer Federation of the Southeast.

There are only 73 private carriers in Florida making up about 98 percent of the residential property market, Grady said. Of those, 44 have underwriting losses and sharp declines in their surplus funds.

About a half-dozen small private insurers have either been taken over by regulators or failed in the past 12 months — an indication, Gunter said, that they were either undercapitalized or poorly managed.

“These are all disturbing developments in a four-year span when we’ve not experienced significant hurricanes,” he said. “We should be building reserves now.”

A bill that would take a big step toward deregulation — Senate Bill 876 sponsored by Sen. Mike Bennett, R-Bradenton, and the companion House Bill 447 by State Rep. Bill Proctor, R-St. Augustine — would eliminate the need for the state Office of Insurance Regulation to rule on rate requests by insurers. The office instead would be focused on whether the rates being charged allowed the private company to remain financially strong, Grady said.

The Office of Insurance Regulation took issue with the claim that rate regulation is causing the problem. Instead, the office issued a statement saying the economy is the main culprit.

“Insurers’ recent financial performance is due to systemic problems and is not due to a suppression of rates,” the statement said. “Relative to other industries, and given Florida’s unique challenges, the Florida property insurance marketplace has been remarkably resilient.”

Grady and Gunter spoke favorably about the bill, but Grady bluntly noted “we are for what is going to pass.” A similar bill was vetoed by Gov. Charlie Crist in the 2009 session, but Bennett thinks the expanded bill has a good chance of winning Crist’s approval this time around.

“The OIR gave him (Crist) some bad information last time on the number of companies coming to Florida and the amount of money. The secretary misled the governor,” said Bennett.

The bill also would require the special assessment Citizen policyholders receive to follow the person, even if the policyholder signs up with a new company.

Local insurance agency heads Andy Gregory and Bob Fowinkle agreed that deregulation is the best way to improve the insurance picture in the state.

“Deregulation is the only thing we can do to get competition back in,” said Gregory, president of Des Champs and Gregory. “Competition always wins — it always works that way, although we might not always like the impact at first.”

Critics have said a free marketplace will undoubtedly mean higher rates. But Fowinkle, president of Moore, Fowinkle & Shroer Agency, thinks it’s the best choice.

“If we keep on like we are going, we’re not going to have any insurance companies in town or in the state,” he said.

Jennifer Rich, business editor, can be reached at (941) 745-7087.