Senator Bennett, Representative Proctor Hold Media Conference on HB 447; Bill Would Afford Partial Deregulation to All Florida Insurers

Together with State Representative Bill Proctor, Senator Mike Bennett held a media conference today, December 8, 2009, during which he discussed issues related to House Bill 447 (filed today) that would partially deregulate Florida property insurance rates.

Senator Bennett opened the conference by stating the biggest issue faced by the State continues to be property insurance and the future of Citizens Property Insurance Corporation (“Citizens”).

The bill, which was filed last year, but with slightly different language regarding insurer eligibility for the deregulated rates, is considered by its sponsors to be a good plan because it allows consumers to choose the policies for which they are comfortable paying. 

The previous bill, which ultimately was vetoed by Florida Governor Charlie Crist, initially was known as the “Consumer Choice” bill, but quickly became known as the “State Farm,” bill.  According to Senator Bennett, this was a misnomer.  The legislation ultimately was vetoed by Florida Governor Charlie Crist based on what Senator Bennett characterized as “bad information.” 

Senator Bennett said that, at the time, the financial market supposedly was improving and thereby infusing the Florida insurance market with large amounts of new capital.   However, it was determined that most of that “new money” came from surplus lines carriers, which are even less regulated than carriers would have been under the vetoed bill.

Thus, the legislation has been re-filed, but with “safeguards” in place to provide the opportunity for consumers to “shop around.”  Most notably, HB 447 affords the opportunity for all licensed insurance companies to charge partially deregulated rates by removing the eligibility thresholds contained in the previous legislation.  

Representative Proctor explained that the purpose of HB 447 is to revitalize Florida’s private insurance market by retaining carriers and attracting new capital into the State.   This is expected to reduce the market burden on Citizens, which, in turn, reduces the financial burden on the State. 

Representative Proctor also assured that transparency issues have been thoroughly addressed in the drafting of HB 447.

In response to a media member’s query about how bill sponsors will respond to critics who charge that the legislation would reverse the progress made in recent years to fix Florida’s insurance crisis, Representative Proctor said that he believes ” . . . what we have done in recent years has put our state at major risk and (the bill is) attempting to fix that.”

Senator Bennett was asked why the bill is needed, given the current negotiations to keep State Farm in the market that involve the Governor’s Office and the Florida Office of Insurance Regulation (“OIR”). He replied that consumers should be able to decide what they want to pay for their policies.  To illustrate, he used the analogy of consumers being allowed to pay extra money for a Lexus that is really just a high-priced Camry.  Consumers should be allowed to make the same choice about the purchase of insurance, he explained.

Representative Proctor informed the group that his incentive to file HB 447 had nothing to do with State Farm, but rather, was based on a constituent who wanted to keep his USAA homeowners policy regardless of what the price was, even though the current law would not allow him to do so. 

In its previous form, the partial deregulation legislation set forth eligibility thresholds for insurers.  When asked at today’s conference why the eligibility thresholds were changed for HB 447 to include all Florida insurers, Senator Bennett explained that the eligibility thresholds were placed in the bill at the OIR’s request.  He recalled that he didn’t want that provision in the bill and, after it was added, the OIR disputed it.

The legislators were asked whether conversations had taken place with Governor Crist regarding his willingness to sign HB 447.  Senator Bennett replied that, given the related misinformation previously promulgated regarding new capital in the Florida market, he felt that the Governor ultimately would reverse his position.

Senator Bennett and Representative Proctor stated that, through HB 447, they were trying to depopulate Citizens, or prevent policyholders from winding up there.  To accomplish this, HB 447 requires Citizens policyholders to be advised of the insurer’s capacity to levy a surcharge in the event it does not have adequate claims-paying funds.

The legislators were asked whether removing the OIR’s ability to prohibit rate increases, coupled with increasing the ability for insurers to drop policies would force even more policyholders into Citizens.  Both stated they did not feel that scenario would take place.

Senator Bennett added that an extensive amount of work still needs to be done regarding the Citizens-related provisions in the bill.  He indicated he will probably file a bill this year to sunset Citizens because of his sentiment that this is the proper course of action for the State to take.  No other details were provided on this suggested legislation.

A press release and fact sheet distributed at today’s conference are attached for review.

 

Should you have any comments or questions, please contact Colodny Fass.

 

 

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