News & Updates


Insurance Bill Aims to Cut Both Ways

Legislation would reduce some consumer protections, may be vetoed.

Published: Friday, April 30, 2010 at 11:15 p.m.
Last Modified: Friday, April 30, 2010 at 11:15 p.m.

In the final hours of their session, state lawmakers Friday approved an insurance bill that would curb some consumer protections and make it easier for insurers to raise rates, but also would give regulators more power over companies that show signs of financial weakness.

The bill, hailed by state insurance regulators as a balanced approach, now goes to Gov. Charlie Crist for consideration. He has threatened to veto any insurance bill that includes rate increases.

Lobbyists for the insurance industry cheered loudly as the “must-have” bill cleared its final stop in the House in one of its last official acts of the session. It passed the House 83-34 and the Senate 32-6, opposed largely by lawmakers in areas with already- high insurance rates.

Leaders of the state trial lawyers association claim the bill rolls back consumer protections won after the 2004-05 hurricanes. They expect Crist to kill it.

“We probably don’t need to call on him to veto this bill because he has said he will veto anything that includes rate hikes, and this bill contains rate hikes,” said Gary Farmer, a Fort Lauderdale lawyer who took the lead in lobbying for the Florida Justice Association.

Under the bill:

Homeowners would now have only three years to file a claim after a hurricane, down from five years currently.

Insurance companies would find it easier to qualify for 10 percent rate increases without full regulatory review. Companies could qualify for the increases because of inflation and an expanded list of other reasons, including seeking profits.

Insurers could return to the practice of withholding full payment to policyholders until they repair their damaged property. So-called holdbacks were banned after the 2004-05 hurricanes.

New insurers would be required to have $15 million in capital, up from $4 million. But existing companies get a decade to meet the new requirement.

The Office of Insurance Regulation must create a website that lets consumers compare property insurers by price and solvency. OIR also gets the power to demand that insurers losing money disclose how much they are paying to affiliated ventures.

Insurance companies backed the bill in large part because they hope it will curtail the use of public adjusters while reducing the amount of time homeowners have to file claims.

State law allows homeowners to hire their own trained professionals to assess damage and determine what an insurer must pay.

But insurers claim the practice is abused by adjusters who recruit homeowners to file false claims.

Republican sponsors say the bill would have eliminated some $710 million in late-filed Hurricane Wilma claims that forced state programs to levy new consumer taxes.

Consumer advocates, including trial attorneys, argue that three years is not long enough for some kinds of damage, including mold, to become obvious. Insurers assert five years simply gives public adjusters time to drum up more business and increases the chances of fraud.

The chief executives of several companies showed up in Tallahassee in the closing days of the session to push the bill, hiring lobbyists and media consultants to spread their message.

“It is important for the solvency of some of these carriers,” said Jim Massie, a spokesman for the Reinsurers Association of America.