House committee passes property-insurance proposal
Paul Flemming • The News-Press Capital Bureau • March 17, 2010
5:44 P.M. — TALLAHASSEE — A proposal to allow property-insurance companies to raise homeowners rates without regulatory approval passed a first House committee Wednesday and was amended to include much of an insurance industry wish list.
Its supporters say the proposal would attract more insurance capital to the state and increase options for consumers. A less-ambitious version passed last year was vetoed by Gov. Charlie Crist, who says he’s still against it.
Rep. Bill Proctor’s current bill would allow companies to charge rates beyond those approved by regulators, with important exclusions. Florida’s largest property insurer, state-run Citizens Property Insurance, is excluded, as are the policies private companies have taken over from Citizens. Also excluded from unregulated rate increases would be policies that don’t cover wind damage.
“The question, really, in my mind remains, does this broaden consumer choice . . . (and) is it possible it might attract some additional surplus” investment in the state, Proctor said.
An entirely new version of Proctor’s bill was offered to the House Insurance, Business & Financial Affairs Policy Committee, with the strike-all amendment published Tuesday. The new version eases into full rate deregulation with limits on rate increases at 5 percent in 2011, 10 percent in 2012 and 15 percent annual increases thereafter.
Insurance Consumer Advocate Sean Shaw said he understood a need to find a balance among the interests of consumers and the industry, though he said the bill goes too far.
“I think this bill is askew with that balancing act,” Shaw said.
Shaw also said rate hikes could be even higher than the caps for individual policyholders if those limits apply to a statewide average.
“You might be seeing 15-, 20-, 30-percent rate increases in some areas,” Shaw said.
Proctor said he’d try to address that.
“I think those are valid concerns and I think we can work on that language,” Proctor said.
Republican members of the committee pounced on Shaw.
“I fear that you oppose this bill because you have a lack of faith in that free-market system,” said Rep. Ritch Workman, a Melbourne Republican. “A private business will eventually learn when they have charged too much. From the consumer perspective, there are people that would like very much to spend more to get more.”
Proctor’s bill would also concentrate responsibility for paying back Citizens deficits on its own policyholders, up to a maximum 45 percent surcharge on top of premiums, before assessments would be charged to all private insurance consumers — not just homeowners — if Citizens deficits remain.