News & Updates


Still deregulation, still bad: Property insurers keep seeking their favors.

Opinion blogs

By The Palm Beach Post

Posted: 6:42 p.m. Thursday, March 25, 2010

Technically speaking, the Legislature’s property insurance deregulation bill isn’t a deregulation bill anymore. Practically speaking, the Legislature’s property insurance deregulation bill remains exactly that.

In their first versions, House Bill 447 and Senate Bill 876 would have allowed the 200-plus companies that write property insurance in Florida to charge whatever premiums they want, without being denied by the Office of Insurance Regulation. A year ago, the industry tried to deregulate the roughly 15 largest companies, and the Legislature went along.

Gov. Crist, however, vetoed that bill. He promised to do the same this year if he got a bill allowing full deregulation. So the many legislators who support the misguided idea of unchecked premiums amended the legislation. It now says that property insurers could raise rates by 5 percent in the first year without asking regulators, 10 percent in the second year and 15 percent in the third year — and every year after that. Over time, that essentially would amount to insurance deregulation.

Now, you might be thinking that 5 percent or even 10 percent these days doesn’t sound so bad. Keep in mind, however, that those figures would be statewide averages. Based on previous rate filings, the increases in South Florida and the Treasure Coast would be at least double those amounts, and probably higher.

And there’s more. During a special session in January 2007, the Legislature made another $12 billion worth of subsidized reinsurance available to insurers. They buy reinsurance as a hedge against big claims payouts after a hurricane. In late 2006, insurers had warned of major rate increases, and cited the high cost of private reinsurance. In return for that favor, however, the Legislature also required companies to pass along their savings to consumers. The insurers opposed that requirement, and have been fighting to get it abolished. HB 447 and SB 876 would abolish it.

HB 447 passed the Insurance, Business and Financial Affairs Committee 11-3. Rep. Carl Domino, R-Jupiter, who’s running for the state Senate, voted for it. Rep. Kevin Rader, D-Boynton Beach, also is running for the Senate and also voted for it. Rep. Rader is an insurance agent. SB 876 was approved by the Senate Banking and Insurance Committee. Sen. Chris Smith, D-Fort Lauderdale, who represents a portion of Palm Beach County, voted for it. Sen. Joe Negron, R-Stuart, voted against it.

The Office of Insurance Regulation opposes these anti-consumer bills, and wants the Legislature to focus on the causes of higher premiums, such as reinsurance and fraud. Other bills do that. Ideally, the Legislature would abandon this push for deregulation in all but name. If the Legislature instead sends these bills to the governor, he should receive them as warmly as he did last year’s attempt to gouge policyholders.