The Legislature Devours the Pie
Everyone seems to want a piece of the insurance industry pie! As this issue went to press, Senate Bill 1488, which would create a single Florida-wide territory map and eliminate individual rate territories based on predicted hurricane risks and expected loss models passed with only one dissenting vote.
The bill would bring many changes and cause a huge amount of paperwork for the insurance industry. Some of the provisions include a cap on any rate increase next year by Citizens Property Insurance Corp.; all insurance companies would have to use a standardized territory map on premiums; and policyholders could choose higher hurricane deductibles.
Other tough legislation was being pushed by Tom Gallagher, Florida’s CFO, and Rep. Dean Cannon that would increase penalties for filing fraudulent auto crash reports that would increase penalties for filing fraudulent auto crash reports that can be used to bilk insurance companies, strengthen consumers’ rights to sue operators of unauthorized insurance entities and enhance criminal charges for workers’ compensation fraud–a good move!
But what about the legislature’s hit list? A few other targets are: Lower Hurricane Catastrophe Fund deductibles to an aggregate $4.5 billion for any year’s two biggest storms and a third of that for all other storms; the House bill lowers the deductible to $4 billion. Set up a low-interest loan program for homeowners who make improvements that will protect their homes from hurricane damage. “Clarify” legislative intent of the valued policy law to indicate a total loss of an uncovered peril and pay losses only on the percentage caused by a covered peril. Require insurance companies to reveal to regulators all assumptions used in computer models used in rate cases. Require public hearings for any rate increase of 15 percent or more, up from the 25 percent increases that now require public hearings. Numerous changes to Citizens Property Insurance, including a $1 million cap on the value of dwellings covered by wind insurance, and to base its rates on actual risk. Create a commission to study a single “basic” hurricane policy. Establish criteria for regulators to reject property policy forms. Require a policy checklist spelling out what’s covered. Require companies to pay replacement costs, when that coverage is included, without depreciation. Extend the state’s mediation process to commercial lines.
If you’re like me, your head must be spinning by now; mine is.
As in other Florida departments, the goal is always to protect the consumer, irrespective of what effect it has on the industry being regulated, even when that protection ends up hurting the consumer more than helping. In this case, the proverbial “pie” is being cut up into such small pieces, and attempts being made to legislate and control so many itty-bitty and totally unmanageable concerns that before long there will be nothing left but crumbs.