Crist and Senate at odds over insurance rate bill
By CATHERINE WHITTENBURG
Published: March 25, 2010
TALLAHASSEE – A Senate panel voted on Wednesday to let property insurers raise their rates without approval from regulators, despite public urging from Gov. Charlie Crist that lawmakers reject the plan.
Crist vetoed a similar bill last year that would have empowered large property insurers to set their rates. Lawmakers passed that measure after State Farm announced it was leaving Florida because of the state’s rejection of its request for a large rate increase.
State Farm has opted to stay in Florida. But the sponsors of last year’s deregulation bill, Sen. Mike Bennett and Rep. Bill Proctor, filed a similar proposal for the current session, despite Crist’s unwavering opposition.
“Especially during this economy, people need help more than ever before,” Crist said Wednesday. “Legislation that would increase insurance rates is not the right thing to do.”
Hours later, the governor appeared before the Senate Banking and Insurance Committee to ask its members to reject the bill. The committee rebuffed his appeal, approving it 6-4.
Supporters argued that the proposal will expand consumers’ choices between insurance carriers by making it easier for them to do business in Florida.
Too often, the only alternative that consumers have now is the Citizens Property Insurance Corp., the state-run property insurer of last resort, said Mark Delegal, lobbyist for State Farm. “Wouldn’t it be nice if they had (another) option? Whether that option is $1,500 or that option is $15,000, at least they have a choice.”
Limiting rate increases
The committee modified the plan to restrict rate increases statewide to 5 percent the first year, 10 percent the second year and 15 percent every year thereafter.
“This, I hope, will alleviate the concerns that the carriers are going to ‘go off-the-chart’ by making dramatic rate increases,” said Bennett, R-Bradenton, who proposed the amendment.
But Sen. Mike Fasano, who voted against the bill, noted that those limits on rate increases are statewide averages, not hard caps for each policy.
That means, he said, that policyholders in high-risk coastal areas probably would experience rate increases substantially larger than the 5 percent, 10 percent or 15 percent statewide average.
Fasano, R-New Port Richey, said the proposal puts too many of his Bay area constituents at risk.
“I do have senior citizens and working families that live in a modest home and are struggling to pay their premiums, and now we’re going to say to that homeowner, ‘You either pay this new premium or you get nothing at all,'” he said. ‘And by the way, your premium on average is going to rise 30 percent next year, and possibly 30 or 40 percent the following year, and possibly 40 or 50 percent the following year.'”
Bennett, who noted that he lives on the water, said that he would be among those who probably would experience the larger rate hike. “I want to make sure whoever is insuring my home, when the fire hits or the storm hits, I want to make sure that they have charged enough that they will still be in business.”
Crist said later that Bennett’s amendment did not change his opposition to the bill, which faces two more committee stops.
The House version from Proctor, R-St. Augustine, has passed one committee and awaits a final hearing.
Separate increases possible
Meanwhile, another property insurance bill advancing this session would make it easier for insurers to make separate expedited rate filings to raise rates by as much as 10 percent in a single year.
A 2009 law permits such rate filings but only to recoup certain costs. So far, seventeen insurers have made such filings, which are subject to less regulation. Nearly all have been approved.
This year’s proposal, from Senate Banking and Insurance Chairman Garrett Richter, would add inflation factors and other cost drivers to the list of justifications for an expedited rate filing for a 10 percent increase.
Fasano said he voted against Richter’s bill during an earlier meeting because it, too, fails to protect consumers adequately.
Unlike Bennett’s plan, Richter’s has support from the Office of Insurance Regulation. Crist is reviewing the proposal, his staff said.