Measure Allows Property Insurers To Raise Rates Up To 30%
TALLAHASSEE (CBS4)- A Senate committee approved a measure on Wednesday to allow insurers to raise individual rates by up to 30 percent a year without state approval.
By a 6-3 vote, the Senate Banking and Insurance Committee approved a measure (SB 1330) that allows property insurers to raise the statewide average premium by 15 percent per year under a measure that mirrors an effort vetoed last year by Gov. Charlie Crist.
“It’s a consumer choice bill that can be a vital part of the re-establishment of a private market in this state,” Rep. Alan Hays, R-Umatilla and sponsor of the bill, told committee members before the vote.
Backers say the measure is part of a series of changes they say would help restore the private insurance market by reducing some of the cost drivers and allowing companies to raise rates they say are artificially low.
The proposal would prohibit the Office of Insurance Regulation from denying a rate hike of up to 15 percent – as a statewide average – for being excessive. Individual rates could be increased by up to twice the amount of the statewide average increase, again without OIR approval.
A House version (HB 885), sponsored by Rep. John Wood, R-Winter Haven, has yet to be scheduled for a hearing in that chamber.
Critics of the plan say the industry is crying wolf by claiming losses when there have been no significant storms in the past several years. They also say consumers will be forced to pay higher premiums or be transferred into Citizens Property Insurance Corp., the state-run property insurer that now covers 1.2 million policyholders, the most of any single company.
“This is a complete deregulation bill,” said Gary Farmer, a lobbyist for the Florida Justice Association, which opposes the idea. “(OIR) would lose the ability to reject a rate as being excessive.”
The bill is the latest in a trio of measures introduce this session that attempts to make changes to the property insurance market following the veto last year of SB 2044, which included several of the same ideas. This year, backers split the measure into separate bills.
Another measure (SB 408) also makes a number of changes first proposed last year. It allows insurers to pay actual cash value of property up front and to pay more generous replacement costs after repairs or replacement has been made. The bill also reduces from 180 days to 90 days the length of time an insurer must give policyholders after notifying them their policy is not being renewed.
The most controversial element of SB 408 would allow companies to drop sinkhole coverage and instead be required to offer catastrophic ground collapse coverage and pay up only if the sinkhole renders a home uninhabitable.
Business groups have targeted the insurance issue as one of their top priorities. Despite the absence of hurricane damage over the past several years, some insurers have gone out of business, a combination of lackluster investment returns and non-hurricane losses.
“What we’re doing right now is not working,” said Sen. Ellyn Bogdanoff, R-Fort Lauderdale, on Wednesday before the vote. “We owe it to ourselves to see if it will work.”
Opponents on Wednesday said deregulating rates is an untested attempt to strengthen a market that has already jettisoned its riskiest policies to Citizens, which they contend will grow if the bill is ultimately approved.
“I would like to see a free market system on everything we do,” said Sen. Eleanor Sobel, D-Hollywood. “But this is a statewide experiment. I think there will be a lot of disgruntled people across the state of Florida.”
(© 2011 The News Service of Florida. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)