EDITORIAL: Protecting consumers

Florida Today–April 6, 2008

State Senate right to rein in property insurers still ripping off homeowners

Everything’s taking a back seat in Tallahassee this year to the budget crisis, but the issue of affordable property insurance hasn’t gone away.

Consumers are still paying through the nose for coverage.

And hundreds of thousands of policies continue to be cancelled.

Keep in mind private insurers made a $3.4 billion profit in Florida last year. But hugely profitable insurers who cry poor and push for more rate hikes want you, and lawmakers, to forget that.

That’s why the Legislature shouldn’t drop the ball on reforms passed last year, which must be strengthened and better enforced.

So far those reforms haven’t delivered on promises of 24 percent rate decreases, though some homeowners have seen small premium reductions.

A dozen small new companies have also started offering more competitive rates over the past year.

Still, many consumers continue to be fleeced, which is why beefed-up protection measures approved by a Senate committee last week should be approved.

Many measures were handed down in March from a special committee on property insurance accountability vice-chaired by Sen. Bill Posey, R-Rockledge, that grilled industry big shots on greedy and potentially illegal practices, and found plenty.

The tougher plan would:

# Require insurance companies to use state-approved hurricane loss models, not their own rigged models, when calculating rates.

# Let the state restrict massive policy cancellations by insurers and suspend licenses of companies that refuse to provide subpoenaed information — as some did this spring.

# Increase fines for insurers that ignore state statutes, up to $100,000 for deliberate violations.

# Continue a rate freeze for Citizens, the state-backed insurer that carries 1.2 million policies, until 2010, then limit increases to no more than 10 percent a year through 2012.

Critics of a freeze say, with some merit, that Citizens won’t have the dough to pay claims if bad storms arrive. But thousands of Floridians are hit hard by the economic slump, and many are on the brink of foreclosure this year.

That’s why this year’s risk of Citizens getting caught cash-short must be weighed against the equally strong risk higher insurance costs would push more residents out of their homes and deepen the state’s economic meltdown.

One part of the Senate plan that should be ditched is a proposal allowing Citizens to insure homes that cost $1 million or more.

That puts lower-income policyholders statewide unfairly on the hook to help rebuild mansions, should a major storm strike.

And the Senate’s bid to reduce by $3 billion the state’s exposure to risk in the Hurricane Catastrophe Fund continues to trouble us. It will likely mean higher premiums, up to 3.4 percent statewide, and as high as 8 percent in high-risk areas.

For Floridians who have yet to see substantial relief from huge increases since 2005, that’s a double whammy.

Why give insurers another inch, when they’re still taking a mile from struggling homeowners’ budgets?

Instead, lawmakers should end the royal rip-offs for real, before giving insurers another dime.