Sunshine State News
by Gary Rohrer
May 4, 2011
With three days left in the legislative session, those pushing for reforms to Florida’s insurance market, especially to state-run Citizens Property Insurance, are bemoaning the lack of bold legislative reforms that made it through the lawmaking process this year.
The House is poised to take up an insurance bill Wednesday that eliminates the requirement for private property insurers to offer sinkhole coverage. The bill already passed the Senate, and insurance reform advocates say it will help put the market back on a sound footing, but falls short of the transformative change to Citizens they seek.
Insurance companies and low-tax advocates have warned for years that allowing rates to rise for private companies while holding Citizens’ rates arbitrarily low, merely funneled customers into Citizens and encouraged private companies to leave. The effect of that policy means taxpayers would be on the hook in the event of a catastrophic hurricane, since Citizens’ rates are not actuarially based, and the state-run company and the catastrophe fund would not be able to cover the losses.
“That is simply a formula for the growth of Citizens,” said Don Brown, senior fellow at the Heartland Institute and former chairman of the state House Insurance Committee.
At the start of the legislative session, insurers had high hopes for reform, with a pro-business GOP sweep in the 2010 election putting a veto-proof Republican majority in both chambers of the Legislature and a bottom line-minded executive in Gov. Rick Scott. But bills that would have allowed Citizens to raise rates on their 1.3 million policyholders at a more rapid rate and end policies for property valued over $1 million did not make it through the committee process, as legislators shied away from increasing insurance rates on homeowners.
“The one thing that everybody understands intuitively is that Citizens doesn’t have enough money to pay its claims and the cat fund can’t even cover its first storm and it’s legally required to cover two. That is going to be an unmitigated disaster when we get hit,” said Barney Bishop, president and CEO of Associated Industries of Florida.
http://www.sunshinestatenews.com/blog/insurance-reform-advocates-see-missed-opportunity-sessions-end
