Letter from Democratic Leader Dan Gelber to Governor Crist Urging addition of Property Insurance to Special Session Call

Responding to recent developments regarding insurance rate filings and subsequent disapprovals by the Florida Office of Insurance Regulation (“OIR”) Democratic Leader Dan Gelber today issued a letter to Governor Crist urging  that homeowners insurance legislation be added to the call for a September Special Session.

Representative Gelber made the following suggestions to the Governor:

• Authorize the Florida Hurricane Catastrophe Fund (“Cat Fund”) to sell reinsurance at the remote areas of risk the companies are now insuring at a price range that is between actuarial cost and market.

• Prohibit insurance companies from buying this type of additional reinsurance from their parent company.

• Allow companies to buy this additional reinsurance from the private market, but prohibit passing on to consumers any more than the price the Cat Fund charges.

Representative Gelber went further to include with his letter a proposal for the creation of a Rate Reduction Authority.

The concept of the Rate Reduction Authority is to give the Governor and Cabinet or the State Board of Administration broad enough powers to deal with the changing conditions in the market.

The proposal sets forth that if the state is going to be involved in the marketplace, it must give its agents (the Rate Reduction Authority) the ability and authority to address each crisis without having to wait for the Legislature to convene.

The mission of the Rate Reducation Authority is described as follows:

To evaluate and assess current market conditions, an authority will be created to deliver a reasonably priced insurance product and assume responsible risk as necessary to produce lower premiums. The Rate Reduction Authority will work with the Insurance Commissioner to deliver reduced premiums by setting the form of insurance product sold within the parameters set in statute. The Authority will work to replace the most expensive reinsurance sold in the private market and set prices for insurance products based on actuarial risk.

Representative Gelber’s letter and Rate Reduction Authority proposal are enclosed for your review.

Should you have any questions or comments, please do not hesitate to contact this office.