New ‘Consumer Choice’ Deregulation Bill Returns to Florida
The Consumer Choice Bill lives in Florida, with the recent unveiling of another version of a bill that was vetoed by Gov. Charlie Crist in June.Rep. Bill Proctor and Sen. Mike Bennett are pitching the deregulation bill, HB 447, which would strip regulators of the power to reject residential property insurance rates for all insurers based on excessiveness. The prior version of the bill allowed only large companies to charge what they wanted for homeowners insurance.The Florida Office of Insurance Regulation would still have authority to deny rates if they are deemed arbitrary or discriminatory.The new version of the Consumer Choice Bill is already receiving support from the industry. The Property Casualty Insurers Association of America issued a statement calling the measure a "good bill that will give Florida's insurance consumers exactly what they need -- more and better property insurance choices.""We support legislation that calls for a market-based system giving consumers increased choices for their insurance needs," said William Stander, PCI's assistant vice president.Samuel Miller, executive vice president of the Florida Insurance Council, said most members of the trade group would likely support the bill as well as another bill Miller said the industry is anticipating for the upcoming legislative session in March. Miller said he expects a scenario similar to the last session, when there was the first version of the Consumer Choice Bill and another wide-ranging insurance reform bill receiving attention from lawmakers.Crist did sign HB 1495 last session. The measure allows the state's insurer of last resort, Citizens Property Insurance Corp., to begin raising rates after a three-year freeze and it begins to reduce the exposure of the Florida Hurricane Catastrophe Fund's optional Temporary Increase in Coverage Limit level (BestWire, May 28, 2009). The measure also allows insurers to apply for capped rate increases to get back some of the increased costs for reinsurance."The legislature has to do something more," Miller said. "Maybe they come up with a bill that would allow companies to include more than reinsurance -- flex-rating capped at 10%. Something like that. I think most of our members would support both bills. But it has to be acceptable to the governor. There's a lot of deliberation left."The OIR said it could not comment on the bill because the office had just received it but spokesman Tom Zutell said, as with all insurance bills, Insurance Commissioner Kevin McCarty's office "will thoroughly review and provide analysis as is typically requested by the legislature.""However, Commissioner McCarty will not support any bill that will allow excessive rates to be charged to Florida policyholders," Zutell said.McCarty opposed the first version of the Consumer Choice bill because it would have led to unpredictable rate increases and unintended consequences for the state's domestic insurers, he said. Bennett subsequently called for McCarty's resignation after the commissioner e-mailed Crist and suggested he veto the bill (BestWire, May 22, 2009).The new bill was called "significant property insurance legislation" by the National Association of Insurance and Financial Advisors in Florida."While some are primarily sensitive to pocketbook issues when seeking coverages others would swap a level of rate regulation for a wider array of insurance options," said NAIFA spokesman Bob Lotane in a statement. The legislation "provides a level of market freedom that many Floridians and their insurers say is needed," he added.Scott Johnson, executive vice president of the Florida Association of Insurance Agents, said the organization endorses the new bill because it "corrects certain deficiencies" found in the old one."The previous version only allowed deregulated rates for companies with surplus of more than $500 million," Johnson said. "Most of the companies who really needed the deregulation and were on the brink -- and are still on the brink -- of insolvency, would not benefit. This bill changes that."In addition, HB 447 also states policyholders with Citizens would have to pay their surcharge -- up to 45% of the premium -- should a major storm require it. In the past, policyholders would simply not renew with the last-resort insurer to avoid the surcharge, Johnson said. This layer of surcharges must be tapped before the private market is assessed, he said.The top five writers of homeowners multiperil in Florida in 2008, according to BestLink, were: State Farm Group, with a 17.7% market share; Citizens Property Insurance Corp., with 16.2%; Universal P&C Insurance Co., with 7.2%; USAA Group, with 5.1%; and Tower Hill Group, with 4.5%.(By Chad Hemenway, associate editor, BestWeek: [email protected])
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