Editorial: Shield Florida homeowners from unjustified property insurance hikes
Dec 12, 2010
The following article was published in Florida Today on December 12:
Editorial: Shield Florida homeowners from unjustified property insurance hikes
Florida’s GOP-dominated Legislature runs on the slogan of no new taxes.
But that doesn’t mean lawmakers will protect homeowners from heavy hits to the wallet. To the contrary, they appear ready to grant property insurance companies license to gouge Floridians struggling to stay afloat, purportedly because of the high financial risk posed to insurers by hurricanes.
Space Coast residents remember being socked with doubled or tripled premiums after storms in 2004-05. They also open their renewal bills each year to big increases for coverage, even though no hurricanes have struck in five years.
Yet Republican lawmakers want to bring back legislation to make it even easier for insurers to raise rates up to 10 percent annually, along with other sweeteners for insurance companies.
The Legislature passed such bills in 2009 and 2010, but Gov. Charlie Crist rightly vetoed them.
Lawmakers also might revive a bill sponsored last year by Sen. Mike Bennett, R-Bradenton, to deregulate rates altogether, handing consumers over to the tender mercies of an industry with a record of rigging the books to win unwarranted hikes from the Office of Insurance Regulation.
Gov.-elect Rick Scott also apparently supports changes to help insurers boost profits, even though higher premiums could force more families over the financial edge and worsen the foreclosure crisis.
Meanwhile, evidence mounts that insurers’ claims they’re awash in red ink are false:
- · Florida Administrative Law Judge Daniel Manny ruled in 2009 that State Farm’s claim it needed a 47 percent rate increase or it would become insolvent was based on sham transactions and economic distortions.
State Farm threatened to drop half a million customers if the rate wasn’t approved and has dumped more than 850,000 policies statewide since 2005.
But it hasn’t stopped raking in the dough from Florida homeowners.
An investigation by the Sarasota Herald-Tribune found the company teamed with an unregulated, offshore company to reap big bucks selling reinsurance, billed to 3.7 million customers of other companies.
- · State Farm eventually agreed to drop only 125,000 policies, including 26,521 in Brevard County, in exchange for a 14.9 percent rate increase.
The industry-friendly OIR routinely OKs increases for property insurers, underscoring why protections against skyrocketing rates should be strengthened, not weakened.
- · The Herald-Tribune also found insurers can siphon profits to sister companies that don’t have to open their books to the OIR and continue to hand big bonuses to top executives.
Those dealings are why lawmakers shouldn’t fall for insurers’ tales of penury.
Furthermore, the latest financial reports show profits at property and casualty insurance companies nationwide — which dipped after the stock market tanked in 2008 — are again growing at a healthy clip.
Profits totaled $16.5 billion for the first half of 2010. Overall profitability was up to 6.3 percent from 2.6 percent in 2009, with companies holding $1.3 trillion to pay claims, according to industry associations.
Some changes in laws are indeed needed to shore up Florida’s property insurance market, including requiring smaller companies picking up policies shed by giants like State Farm to be better financed so they can pay claims after storms.
But calls to soften or do away with the OIR rate hike approval process are unconscionable.
To find this article, go to: http://www.floridatoday.com/article/20101212/OPINION/12120312/Our+Views++No+gouging+allowed+%28Dec.+12%29