Insurance: No rate increase for Citizens before 2009
The news from Tallahassee sounds good for Anna Maria Island property owners:
Rates are frozen for Citizens Property Insurance Corp. until 2009. Homeowners are eligible for Citizens if the premiums they are offered by private insurers are at least 15 percent higher than Citizens, and 25 percent has been the rule. And insurers are barred from starting any new "pups," as the Florida-only subsidiary insurance companies are known.
Those are among the highlights of the 70-plus provisions of the insurance law approved by Florida lawmakers Friday, the last day of the legislative session.
Overall, the new law "represents a real victory for consumers," according to state Rep. Bill Galvano (R-68), who represents western Manatee County, including Anna Maria Island, and who has worked for the past year to find solutions to the insurance crisis of soaring rates and limited availability.
The changes, which go beyond the reforms passed at the special legislative session in January, were vigorously opposed by the insurance industry.
But supporters prevailed with the help of the aggressive lobbying efforts by Gov. Charlie Crist and Lt. Gov. Jeff Kottkamp. Crist made phone calls and personal visits to legislators and even testified at some committee hearings to get votes on the bill. Lt. Gov Kottkamp was in the chamber while the insurance legislation was going through "to make sure everyone got the message loud and clear," Galvano said.
After the session ended, the governor commended lawmakers for passing the new insurance law:
"You put the nail in the coffin this afternoon on the industry that was hurting our people, and that’s right and just and fair and important and you did it. God bless you for fighting for the people of Florida."
The governor said he heard "some groans from insurance lobbyists. Tough! This is what’s right. We work for the people."
Opponents of the legislation continued to express concern that the law allows Citizens to make up deficits by assessing nearly all insurance policies in the state.
This view has had the effect of pitting some state representatives from coastal areas - where Citizens is sometimes the only insurance option - against some from North and Central Florida areas who worry that their constituents will be assessed if a major hurricane hits South Florida.
"Floridians have a right to live anywhere they choose, but they don’t have a right to expect everyone else to fund their choice," said Rep. Don Brown, R-DeFuniak Springs. Brown is an insurance agent and the chair of the House Insurance Committee.
In the end, the House approved the bill 106-10.
Galvano described the prevailing mood among lawmakers supporting the legislation "as a continuation of a philosophical change that began over the summer and showed itself in the special session in January."
He said he personally feels a responsibility to citizens to "be involved in insuring them and making sure they have coverage, so I am comfortable with what was done. I know there are industry people and others in the Legislature who were not thrilled about it, but we are in the business of insurance and we have been in the business of insurance and we need to continue this."
Galvano sees the insurance issue as a work in progress. "It is something we will have to continue to revisit, and only time will tell what needs to be done next."
Good news for business
Citizens Property Insurance Corp. plans for insurance agents to be able to quote rates for its new commercial wind policies starting no later than May 20, according to spokesman Rocky Scott.
The coverage would be effective June 1, in time for the start of hurricane season, he said.
Scott said that the new wind policies are available to commercial property owners, regardless of location, for up to $1 million in damages on property valued at no more than $10 million.
To get the new Citizens commercial wind policy, the property owner needs first to meet with his/her insurance agent. The agent submits information online to Citizens, using a form available at the Citizens Web site. Citizens then develops the rate, relays it back to the agent, and the applicant can then decide whether to go forward with buying the policy.
Citizens policies are sold by insurance agents who are approved through the Citizens appointment system. An independent insurance agent licensed to sell commercial insurance in Florida is typically eligible to be a Citizens agent and sell its commercial wind policy.
Citizens is now working on a plan to provide a multi-risk policy that includes wind coverage for commercial property owners, regardless of location, starting Sept. 1.
Commercial property owners will be able to buy up to $2.5 million in multi-peril coverage from Citizens on property valued at $20 million, Scott said.
Commissioner McCarty responds
Insurance consultant Andrea M. (Andy) Bennett, a new member of the Citizens board of directors, Cortez resident and Longboat Key business owner, offered a critical overview of the Florida system of insurance regulation in a recent interview with The Islander.
In that report, published April 25, Bennett said Florida’s regulation might better be described as "ir-regulation" because of inconsistencies in the laws and regulations. "Nobody wants to do business in Florida because it is not a good place." She added "[policy forms] languish two or three years in Florida."
The response to The Islander this week from Insurance Commissioner Kevin McCarty is that "this is simply not true." His rebuttal came in an e-mail letter to the editor.
"In 2006, the Florida Office of Insurance Regulation (OIR) approved 90 applications for new company licenses - a very clear indication the insurance industry is eager to write business in our state," McCarty said.
"Further comments [by Bennett] implied government regulation is the problem. This is not true. In fact, medical malpractice, private passenger auto and workers compensation insurance sectors have all seen premium decreases within the last few years and new carriers entering the state; clear evidence of a competitive insurance marketplace and very capable regulation. The ‘insurance’ problems in Florida’s marketplace are primarily economic issues associated with the presence of catastrophic hurricane risk in property insurance.
"Regrettably, several insurers have sought to limit their residential property insurance exposure in Florida. This is not due to ‘ir-regulation,’ but to business decisions based on the $36 billion in storm damage generating 2.8 million claims during the 2004-2005 hurricane seasons. The 2007 Special Legislative Session passed several reforms, including providing more inexpensive reinsurance, to encourage insurers to stay."
Meanwhile, McCarty has been in a political storm in recent weeks over questions about political fundraising and the use of an office computer by his communications director for political purposes.
The brouhaha so far has resulted in the resignation of Bob Lotane, the director of communications for McCarty’s office, and the firing of Lotane’s wife, Robin Lotane, from her job as chief assistant state attorney in Tallahassee.
State investigators are looking into the role that McCarty played in asking insurance lobbyists to support Robin Lotane in her campaign for judge in Tallahassee. She withdrew from that race in late April after questions arose over her political fundraising.
McCarty sent a letter of apology to the Cabinet in which he said: "I agree being involved in an effort to advance a personal or political cause may be misperceived and problematic, regardless of its legality."