Senate: Insurance Executives To Be Asked To Testify Under Oath

Members of the Florida Senate held a press conference regarding propery insurance on Thursday, January 8, 2008 to announce the creation of the Senate Select Committee on Property Insurance Accountability.  The mission of the Select Committee is to provide a forum where insurance company executives will be asked to testify under oath.

These hearings are scheduled to commence February 4 and 5, 2008. 

Senate President-Elect Jeff Atwater (R), Democratic Minority Leader Steve Geller (D), Senate Banking & Insurance Committee Chairman Senator Bill Posey (R), and Senate Banking & Insurance Committee Member Senator Don Gaetz (R) were present at the press conference and provided comments. 

Senator Posey noted that insuance companies may be manipulating their reinsurance costs so as not to pass savings onto consumers. 

Senator Geller stated that some insurers have lied and property insurance is the single biggest issue in the state. 

Senate President-elect Atwater also expressed conerns that insurance companies have not passed savings onto consumers as they stated they would with some of the recent changes in law.  One Senator remarked “We made arrangements for the state to take on the burden (of risk) and you broke the law because you did not pass on savings.”

Following the announcement, questions were asked of the Senators by those in attendance.  Several questions included the following (please note that some of the below may represent a summary of the question and answers that transpired):

Question:  “Can you name names (of companies)?”

Response (by Senator Atwater): “They will be coming shortly.”

Response (by Senator Geller):  “There are three categories of speakers we are seeking . . .  (companies that complied, companies that did not comply, and industry experts at the CEO level.)” 

Question:  “Is this (the scheduled Committee hearings) anti-business?”

Response: ” . .  it is part of risk.  The State took the risk and the insurance companies took the profit.”

Question:  “How is this (Committee) not duplicative of OIR? (Florida Office of Insurance Regulation)”

Response (by Senator Geller):  “They made legislative promises with us, not OIR.”

Question:  “What is next step if they (insurance companies) did violate law?” 

Response:  (by Senator Geller): ” . . . civil law suits, deny rate filings, penalties of perjury  . . .  (our) goal is not to be punative, but to get lower rates . . . We do not want locals or lobbyists testifying. We don’t want regional managers. We want the CEOs. We want Mr. Farm from State Farm.”

Response:  (by Senator Atwater):  ” . . . you broke your promise, you broke the law and the day of reckoning is here.”

 

Governor Charlie Crist later issued the following statement:

“In spite of steps taken to lower the cost of insurance, it appears some insurance companies have failed to pass those savings along to customers as the law requires them to do.  I applaud Senate President Ken Pruitt for tapping Senator Steve Geller and Senator Jeff Atwater to lead the Senate’s bold steps to hold Florida’s property insurance companies accountable. 

 “The Florida Legislature worked diligently last year to listen to industry representatives and identify the tools needed to stabilize the property insurance market in Florida.  Sometimes, big business can be just as bad as big government, and I applaud the Senate for taking action today to unravel the mystery of why insurance rates have not come down as we understood they would.  For too long, the industry has profiteered on the backs of our people.”

 

Florida Insurance Commissioner Kevin McCarty issued a statement as well: 

“I am pleased that Gov. Crist and the Legislature are supportive of the efforts of the Office of Insurance Regulation to ensure that insurance companies are complying with the law that was enacted last January.

“Requiring insurance company executives to testify publicly about why their property insurance rates in Florida have not gone down should stand as further evidence to the companies and to consumers that Florida is serious about its efforts to make property insurance available and affordable.

“And, I will continue to do everything within the power of my office to ensure that the required savings that was promised to the Legislature is being passed along to consumers.”

 

An informational release was issued at the press conference, a copy of which is reprinted below:

Senate President Ken Pruitt Appoints the Senate Select Committee on Property Insurance Accountability

Insurance executives will be asked to testify under oath

Tallahassee, FL – Senate President Ken Pruitt (R-Port St. Lucie) today appointed the Senate Select Committee on Property Insurance Accountability. The Committee will be co-chaired by Senator Jeff Atwater (R- North Palm Beach) and Senate Democratic Leader Steve Geller (D- Hallandale Beach); the vice-chairs will be Senator Bill Posey (R- Rockledge) and Senator Alex Villalobos (R- Miami). The committee will be comprised of members of the Senate Banking and Insurance Committee and the Senate Judiciary Committee.

The purpose of the Senate Select Committee is to take testimony, under oath, from property and casualty insurance company executives about their pricing practices and their increased profits associated with escalating rates.

“Insurance industry representatives gave hours of testimony telling us that the price and scarcity of reinsurance was the reason they needed to keep rates high,” said Senator Jeff Atwater.  “Last January, we expanded the coverage provided by the State’s Hurricane Catastrophe Fund from $16 billion to $28 billion to provide insurers with enough lower-cost reinsurance to reduce homeowners’ rates, yet many property owners’ rates have not come down as promised. Floridians deserve straight answers and we intend to use the full force of the law to get the truth.”

“We worked with the insurance industry and regulators who specifically told us that if we took certain actions to reduce the cost of reinsurance, rates would go down substantially,” said Senator Steve Geller. “We took those actions. Some insurance companies kept their promise, but many did not. We need to find out why.”

Senator Geller added, “As we learned during the medical malpractice hearings, when we put people under oath, their stories sometimes change and we achieve better results. Let’s see what happens this time.”  

Senator Bill Posey added, “I look forward to hearing again from those who have testified before the Banking and Insurance Committee. Perhaps the risk of perjury will help shed some light on why the promises they made last January are not being kept.”

“It was only when we put people under oath during the Medical Malpractice reform Sessions that we finally got straight answers,” said Senator Alex Villalobos. “I have long advocated for taking testimony under oath from those who appear before the legislature, and I believe today’s action is another important step toward the best public policy for our state.”

The Select Committee on Property Insurance Accountability will meet on February 4th and February 5th. Over the next week, invitations, and, if necessary subpoenas, will be issued to selected insurance company executives who do business in the State of Florida.

MEMBERS OF THE COMMITTEE

Co-Chair          Senator Jeff Atwater

Co-Chair          Senator Steve Geller

Vice-Chair       Senator Bill Posey

Vice-Chair       Senator Alex Villalobos

Members          Senator J.D Alexander

                       Senator Mike Bennett

                       Senator Carey Baker

                       Senator Mandy Dawson

                       Senator Ted Deutch

                       Senator Alex Diaz de la Portilla

                       Senator Mike Fasano

                       Senator Don Gaetz

                       Senator Arthenia Joyner

                       Senator Al Lawson

                       Senator Durell Peaden

                       Senator Jeremy Ring

                       Senator Burt Saunders

                       Senator Ronda Storms

                       Senator Daniel Webster

                       Senator Frederica Wilson