Senate’s insurance bill fair: But House bill would let premiums skyrocket
As usual, the property insurance bills before the Legislature are long and technical, but it’s easy to tell which one is better for consumers.
The House continues to push for deregulation, which would allow all of Florida’s 200-plus property insurers to charge whatever premiums they wanted — without review by the Office of Insurance Regulation. Last year, the full Legislature passed a bill that would have deregulated rates for the largest companies. Gov. Crist vetoed it. He promised to veto any 2010 version of deregulation.
In the Senate, they got the message. Last week, members crafted a compromise bill (CS/CS SB 2044) that cleared the General Government Appropriations Committee 5-0. Senate leaders support the bill. So does the Office of Insurance Regulation. It is the most balanced insurance bill in at least three years.
Under CS/CS 2044, insurers could raise rates by no more than 10 percent statewide a year, and regulators would have to approve the increase. That system is called “file and use.” Of particular interest to South Floridians is language that prohibits any individual policyholder’s increase from being more than twice a company’s statewide average. Customers in this area pay far more than the statewide average. As noted, the House legislation (CS/CS/HB 447) basically would end all review by regulators.
As Insurance Commissioner Kevin McCarty has advocated, the Senate bill attempts to address the costs that cause insurers to ask for higher rates. Florida requires companies to offer discounts for people who harden property, but some customers may not deserve the discounts they’re getting, and for some improvements the discounts may be too generous. The bill recalculates the discounts and seeks to penalize those who don’t make improvements, which could lower rates for those who do.
Figuring out an insurer’s finances always has been difficult — is it really hurting, and deserving of a rate increase? — and recent reporting by The Sarasota Herald-Tribune suggested that some companies were misusing their holding companies. As a spokesman for the Office of Insurance Regulation put it: “Recently we have found cases in which the insurance company is losing money but still paying the (holding company,) resulting in a profitable … holding company, and not a profitable insurer. This is not acceptable.” The Senate bill would allow regulators to better monitor such transactions, and it would increases the surplus companies must maintain. Sound companies are good for consumers.
Two weeks remain in the session, and the Legislature must pass a property insurance bill. If that doesn’t happen, on Jan. 1 companies will go back to the “use and file” rate system that has been suspended. Under “use and file,” companies can raise rates before going to regulators. If the rates later are reduced or denied, companies must issue refunds. But during all those months of negotiations, customers have paid for what they may not need.
To avoid that, the House should accept the Senate bill. It may be expanded to include other issues, such as a three-year limit on filing hurricane claims and anti-fraud measures, but from the customers’ standpoint the Senate has the better policy.