House Insurance Policy Chief Suggests Addressing Insurance Cost Drivers, Depopulating Citizens As ‘A Good Start’ to Solving Florida Property Insurance Issues
Dec 8, 2010
During a series of meetings held by the Florida House of Representatives this morning, December 8, 2010, in which various Florida policy issues were reviewed, House Insurance and Banking Committee Policy Chief Tom Cooper provided legislators with a general overview of Florida’s insurance market.
Noting that the private sector provides the best option for a healthy insurance market, Mr. Cooper reviewed Florida’s current property insurance laws and regulations. He also reviewed the Florida Office of Insurance Regulation’s role in the rate filing and review process.
Mr. Cooper explained that, if handled correctly, mitigation discounts present one option to reduce the cost of insurance.
In reviewing the basic roles of Citizens Property Insurance Corporation (“Citizens”), the Florida Hurricane Catastrophe Fund, surplus lines companies and Florida Insurance Guaranty Association, Mr. Cooper mentioned that there are 206 active homeowners insurance companies in Florida.
State Representative Dwayne Taylor asked what can lawmakers can do to attract more highly-rated insurers to Florida, to which Mr. Cooper offered the suggestion of addressing insurance cost drivers. Reducing the amount of policies within Citizens would be a good start, he added.
In regard to Citizens, State Representative Frank Artiles urged fellow legislators to take steps to remove Citizens from the free market, inasmuch as the state-run insurer is immune to bad faith claims and “does whatever they want” with no penalty. Citizens coverage must be offered in “non-coverage” areas, he added, but emphasized that he felt it was unfair for it to compete for business in the free market armed with non-competitive rates.
In response to State Representative Jeff Clemens, who asked how Florida’s high-risk areas were designated, Mr. Cooper expanded that, several years ago, meetings were held among legislators, insurance officials and insurers from around the state, during which recommendations were given on what the high-risk areas should be.
State Representative James Grant asked whether a Citizens assessment has ever been levied. Mr. Cooper replied that, in 2006, Citizens had a $1.7 billion dollar deficit, which was covered with $700 million from Florida’s General Revenue Fund, with the remaining $1 billion having been assessed to all types of Florida insurance policyholders. Mr. Cooper added that this assessment was not levied under the same mechanism as the one currently in place for Citizens assessments.
Representative Grant expressed his sentiment that the Florida insurance market should be healthy and open, in which competition is encouraged to lower the cost of insurance for all Floridians.
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