State still needs insurance reform
Sunday letters: Florida still needs to reform property insurance
In Print: Sunday, June 13, 2010
Earlier this month, Gov. Charlie Crist vetoed Senate Bill 2044, delivering a crushing blow to the state’s ability to effectively manage the financial impact of future catastrophic storms.
SB 2044 sought to reform Florida’s insurance marketplace, and in particular, Florida’s Citizens Property Insurance Corp. Think for a moment about Citizens — now the third largest property underwriter in the nation — having to operate in an environment that includes woefully undercapitalized domestic insurance companies, a wholly inadequate rate structure, and mandated policies that invite fraud.
Not only would SB 2044 have helped to correct these vulnerabilities, the proposed measures also would have helped to stabilize the property insurance market and protect the average Floridian from having to pay increased assessments to make up “gaps” in Citizens’ funding.
Equally important, the bill sought to mandate that insurance companies increase their financial capability to pay legitimate claims. The majority of property insurers reported losing money in Florida’s recent hurricane seasons, and some insurance companies failed entirely. Even with no hurricanes (so far) in 2010, Citizens has already been forced to pick up tens of thousands of policies from failed companies.
SB 2044 also included requirements that Floridians file claims within a reasonable time — three years versus the current five, and that full payment be made from the insurance company only upon proof of repair, a change from the current system in which a check is automatically cut without having to prove repairs were actually made.
I’m not in the insurance business and have no ties to claim companies, agencies or underwriters. I have absolutely nothing to gain from supporting the passage of SB 2044. Instead, as chairman of the Citizens Property Insurance Corp. Board of Governors, my focus is on what’s right for the fiscal health of Citizens and all the people in Florida.
Knowing that it’s only a matter of time until storm clouds are brewing, for the common good, this legislation needs to remain on the radar.
James R. Malone, chairman, Board of Governors for Citizens Property Insurance Corp.