The media has recently reported that bills raising insurance rates aren’t making progress in the Florida Legislature because of veto threats by Gov. Charlie Crist. But one bill that allows insurance companies to raise rates by as much as 10 percent has managed to fly under the radar for eight weeks and was approved by the Senate this afternoon.
CS/CS/SB 2044 would greatly weaken the rights and benefits of Florida homeowners and further empower Florida’s property insurance providers.
This 114-page bill contains a hidden rate hike that raises insurance premiums as much as 10 percent each year, for reasons such as “reinsurance,” “financing products,” or inflation. Reinsurance means sharing the risk on premiums with other insurance companies. Big insurance companies often buy reinsurance from affiliated companies. This bill allows this hidden profit generating mechanism to continue and touches upon the recent one year, comprehensive study by the Sarasota Herald Tribune in which they found profits being hidden in reinsurance, management fees and bonuses. It also allows rate increases due to reinsurance expenses to be charged to homeowners without any meaningful state review.
Beyond the rate increases, Senate Bill 2044 contains a number of provisions that benefit insurance companies at the expense of Florida homeowners.
– Insurance company executives and actuaries could submit additional information to the Office of Insurance Regulation without certification that is true and accurate. This discourages companies from filing complete homeowners rate filings because it allows supplementary information for any reason without certification. Certification requirements were passed just three years ago, and the certification requirement ensures honesty and accuracy in important rate filing documents.
– An exemption for medical malpractice insurers from the CAT Fund emergency fund used to pay hurricane claims. This takes away $600 million in needed funds from our already thin reserves and shifts the cost of future claims on to Floridians, including business owners, who must buy auto, homeowners, boat and commercial business insurance. With 22 carriers and lower rates over the past five years, Florida’s medical malpractice insurance market is strong and doesn’t need a special exemption. In fact, FPIC reports record profits and recently purchased the fourth largest medical malpractice insurance company in Texas.
– Limits the professionals who can assist homeowners in the event of a hurricane. It gives insurance companies complete discretion whether to accept the mitigation report and the “hurricane loss mitigation” premium discounts consumers may receive.
Fortunately, one of the worst provisions of this bill was removed by Sen. Ronda Storms (R-Brandon). In an amendment on Thursday, Sen. Storms stripped out a provision that would have allowed insurance companies to NOT pay homeowners replacement cost up-front for their lost or damaged personal property, even though the homeowner already pays extra for this benefit. For the dwelling, the homeowner would have to pay out-of-pocket and produce receipts in order to receive their replacement cost. In its current form, Senate Bill 2044 now forces insurance companies to pay replacement cost benefits for personal property. In addition, Sen. Storms’ good amendment requires that sink hole insurance companies pay contractor bills for repairing a damaged home within twenty days. We commend Sen. Storms for protecting Florida’s consumers.
Despite the hard work of many senators, Senate Bill 2044 remains a bad bill for Florida’s consumers. Florida’s homeowners, many of whom are struggling to just pay their mortgage, don’t deserve another unnecessary, added expense. Florida’s insurance regulators should work at protecting consumers rather than the insurance industry. Gov. Crist has said he will veto measures that raise property insurance rates. We hope that the Governor will honor his commitment to protect the best interests of Florida’s homeowners.
The Florida Justice Association (FJA) is an organization dedicated to strengthening and upholding Florida’s civil justice system and protecting the rights of Florida’s citizens and consumers.