Insurance: Questions raised about governor's rate freeze
Here's another twist in the ongoing insurance drama:
Worried that the insurance industry might try to find a way around the new insurance reform law, Gov. Charlie Crist persuaded the Florida Cabinet to pass an emergency rule last week to prevent cancellations and rate hikes through the end of the hurricane season.
"We've seen over and over again where this industry will take advantage of people," the governor said.
But the sudden and surprising Cabinet action has triggered a round of questions from policyholders who received cancellation notices before the freeze but who have not yet lost their coverage.
They want to know whether the freeze helps them.
These questions had both state representatives from Manatee County scrambling over the weekend to get answers for constituents about the impact of the Cabinet's rule.
Rep. Ron Reagan said he had asked the state's Office of Insurance Regulation to get answers for him so he could respond to the questions he was getting.
"This is a huge issue, and I need more information on what it means," Reagan said.
The same questions came up Wednesday night at a Bradenton meeting hosted by Manatee County Commissioner Jane von Hahmann where state Rep. Bill Galvano was talking about the new insurance legislation. Several people in the audience said they received cancellation notices from Allstate only a few days before the freeze was imposed on Jan. 30. They wanted to know if they will be able to keep their policies or if they will have to find new coverage.
Cancellation notices are typically sent out 30 or more days before the policy coverage ends.
Galvano told his audience that he would have to find out the details of the Cabinet freeze before he could say how it impacted an individual policyholder. He promised to research the issue and get back in touch with those policyholders.
At press time, The Islander was also waiting for answers.
Reagan has a powerful new position
As the new chairman of the powerful House Jobs and Entrepreneurship Council, Reagan now oversees several House committees, including insurance, utilities and business regulation.
In an interview with The Islander newspaper on Friday, he said he is already working on insurance issues for the general session of the Legislature, which begins March 5 in Tallahassee.
Reagan said he expects to spend most weekdays in Tallahassee for the next three months, until the session ends in early May. He estimates that 25 to 30 percent of his time will be devoted to insurance issues. But he is not complaining about the extra hours.
"I am pretty excited," he said. "The speaker, Marco Rubio, gave me a great opportunity."
Reagan replaces state Rep. Don Brown of DeFuniak Springs, who recently resigned as chair of the House Jobs and Entrepreneurship Council.
Brown has been reported as saying he was asked to resign.
Both Brown and Reagan are insurance agents.
The difference is that Reagan supported the reforms approved by the special session. Brown opposed them.
Brown also played a key role in pushing through the 2006 insurance package that resulted in record-high rate-hike requests, including the proposal by Citizens Property Insurance Corp. to impose a 767 percent increase on its commercial customers on Anna Maria Island. That proposal was overturned in the 2007 insurance law.
Although Brown no longer chairs the Jobs and Entrepreneurship Council, he still has plenty of legislative muscle as the chair of the House Insurance Committee, the position that Reagan held before he was named to replace Brown.
'Very happy' about insurance reforms
Reagan, who questioned some of the reforms when the special session began but then helped push the package through the Legislature, said he is "very happy" with the final product.
He said he was most proud of the contributions that he personally made in restructuring the Florida Hurricane Catastrophe Fund, also known as the Cat Fund, to provide more cheap reinsurance for companies, with the requirement that they pass the savings on to their policyholders.
"That in itself opens more capacity in the market," he said.
Reagan said that he is optimistic that the insurance companies now operating in Florida will remain in the state, despite rumblings by some industry officials who warned that the new Florida laws were too tough on insurers and would drive them away.
"What I'm hearing is overall good news," Reagan said. "It doesn't look like a mass exodus. There are a lot of [insurance] people crunching their numbers to see what savings they might be able to give policyholders and companies looking to see if they will be financially solid and able to stay. Right now it looks good. "
He said there are a "couple of companies who are a little worried and evaluating their situation, but if they can buy reinsurance from the state at a lower price, it will work out for them."
Reagan said the special session had one mission - rate relief. "And I believe we succeeded."
The session was especially good news for policyholders with Citizens, he said, because of the rolling back of its rate increases for January and its rate increase proposal for March.
'Pay now or pay later'
Reagan described the new insurance legislation as a worthwhile gamble.
"If the wind doesn't blow this summer, the governor is a hero," he said. "If it blows, then we go back and make sure we have proper reserves to pay claims and make sure we spread the assessment over the entire state."
Here is how he described the change in legislative attitudes this year as compared to last year:
"What we said last year was that Citizens had to be sound and build reserves and be able to pay claims. Now we are saying that it doesn't have to be actuarially sound for big storms because we will take the risk that the assessment, if there is a storm, will be spread over the entire state."
Reagan said he believes the Legislature this year had the right approach.
"We are taking a chance, but we are keeping premiums low and, if we need assessments, we will assess after the fact and I think that is worthwhile.
"We are letting people hold onto their money for now, and we will pay for it later, if necessary."
More home mitigation efforts
The Windstorm Mitigation Study Committee - which was created by the new insurance legislation - will hold its first meeting from 9 a.m. to 3 p.m. Thursday, Feb. 7, in the Senate Office Building in Tallahassee.
The meeting is open to the public.
The eight-member committee is supposed to expand and improve hurricane mitigation efforts in Florida. The point of all this is to find short- and long-term means to make homes more resistant to damage from hurricanes and other windstorms.
That will help efforts to hold down insurance rates in the future, legislators said.
A final committee report is due by March 6. You can learn more about the committee, its duties and upcoming meetings at its Web site, www.fldfs.com/WindstormMSC.
According to the message posted on the Web, each member of the committee "must be knowledgeable about mitigation issues and at least one member must represent homeowners' interests."
The Department of Financial Services, headed by Chief Financial Officer Alex Sink, must supply meeting facilities, information and technical assistance. The Web site states that the study committee will look at a range of issues, including:
- Availability of inspections and grants.
- Effective ways to inform policyholders about obtaining mitigation credits.
- Coordination among federal, local and private initiatives.
- Available funding sources for mitigation, including tax incentives.
- Consumer information and research on benefits of mitigation.
Town meeting on insurance set for Saturday
Everyone is welcome to a town meeting with state Rep. Bill Galvano, who will speak on insurance Saturday, Feb. 10, at the Cafe on the Beach at the Manatee Public Beach, 4000 Gulf Drive, Holmes Beach.
The Islander newspaper is co-sponsoring the meeting with the Anna Maria Island Kiwanis Club, which will begin its regular meeting at 8:30 a.m. inside the Cafe on the Beach.
Galvano, a Republican legislator representing Anna Maria Island and western Manatee, is scheduled to speak at 9 a.m. There will be a question-and-answer session following his remarks.
Everyone is welcome to attend to get the latest news on the wind pool, Citizens Property Insurance Corp. and the measures taken to resolve the state's insurance crisis, as well as a preview of what to expect from the Florida Legislature in its upcoming session.
The Islander will provide refreshments. The public can attend both meetings or arrive shortly before 9 a.m. for Galvano's presentation.