Fla. Regulator Vows Enforcement of 2007 Law, Insurers Weigh In
Florida’s requiring that insurance company executives testify publicly about why their property insurance rates have not gone down proves the state is serious about its efforts to make property insurance available and affordable, according to Insurance Commissioner Kevin McCarty.
“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,” McCarty said. “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.”
In 2007, lawmakers passed a major reform measure, HB1A, which promised insurers would pass along savings from lower cost reinsurance to insureds. But the Crist administration has complained that those savings have not materialized.
Lawmakers have named a Senate Select Committee to take testimony, under oath, from property and casualty insurance company executives about their pricing practices.
McCarty’s office has also been subpoenaing executives to explain their rate filings.
Insurance agents think the legal moves against executives might be counterproductive.
“This just takes us back a step and makes insurers rethink that Florida may be the right venue for them,” said Jeff Grady, president of the Florida Association of Insurance Agents.
According to Grady, the market – for whatever reasons – is improving and there are better choices and more capacity available.
“We don’t see it [legal actions] as a positive move but despite that, the market has come around and there have been dramatic price reductions,” Grady said.
The market should be allowed to continue to adjust to the legislation, he added.
“What’s kind of odd is that the legal actions are being directed at the national companies, many of which are withdrawing from the market anyway,” Grady said. “This is kind of kicking them in the pants on the way out the door.”
Sam Miller, executive vice president of the Florida Insurance Council, said insurance companies have abided by the state laws.
Insurance companies are bound, not only by HB 1A but also by an insurance rating statute and the Insurance Code, which he said is one of the toughest in the nation.
He also said that rate increases sought by some carriers have not taken effect because they were denied by the OIR.
Companies and the OIR now take their differences to the state Division of Administrative Hearings, and if there remains a dispute after the administrative judge’s ruling, to the Florida courts, Miller explained.
“This process should be allowed to work,” Miller said. “This is the dispute resolution process laid out in the Insurance Code, which, if anything, was tilted more in favor of the Office of Insurance Regulation with passage of HB 1A.”
While Miller contended that the Florida Insurance Code is a fair process, he also called it “a tough process.”
Sources: Office of Insurance Regulation
Florida Association of Insurance Agents
Florida Insurance Council