Bill would let property insurers raise premiums up to 15% without state approval
By Michael Peltier
News Service of Florida
Posted: 8:50 p.m. Wednesday, March 17, 2010
TALLAHASSEE — Property insurers would be able to raise premiums without regulatory approval, but only by up to 15 percent a year, under a wide-ranging insurance approved in a House committee Wednesday.
The proposal (HB 447) was amended to add the 15 percent cap on unregulated premium increases, and to include other reforms that were requested by the property insurance industry including allowing companies to withhold most of replacement payments until the work is completed.
Sponsored by Rep. William Proctor, R-St. Augustine, the original proposal allowed property insurers to raise premiums in excess of those approved by the Office of Insurance Regulation without the agency’s approval. OIR would retain authority over other aspects of insurance regulation.
The amended version would ramp up the ability of companies to raise rates. An insurer could boost rates by 5 percent the first year, 10 percent the second year and 15 percent from then on without OIR approval. The House Insurance, Banking & Financial Affairs Policy Committee approved the measure on a 11-3 vote.
Backers say the increases are needed to shore up an industry ravaged by non-hurricane losses and rates that are not actuarially sound. Such rates have resulted in a market in which state-run Citizens Property Insurance Corp. is the largest property insurer in the state.
“I find it incredible that some people would think that the market we have now is working,” said Rep. Alan Hays, R-Umatilla. “That flies right in the face of the facts. The only reason why it’s working is that we haven’t had a 100-year storm.”
Critics, including state insurance regulators, say the bill provides too many concessions to the industry at the expense of consumers — the policyholders. They also said the measure lacked provisions to prevent unapproved increases after rates become actuarially sound.
“There is a balancing act between consumer interests and market interests. This bill is askew in regard to that balance,” said Sean Shaw, consumer advocate for the Office of Insurance Regulation.
Added to the bill were a number of provisions that had been part of separate legislation addressing a slate of recommendations insurers say they need to remain able to pay claims.
The measure now would allow companies to withhold 60 percent of payment for replacement until the repairs or purchases are made. Since 2006, Florida law has required insurers to pay the full replacement payment up front regardless of whether the repairs are made.
The measure also excludes medical malpractice policyholders from being assessed in the event of storm.