Despite a Florida law passed in January that officials promised would lower property insurance rates, many companies this week have requested to raise rates. Gov. Charlie Crist said, however, that insurance regulators should reject most rate hike proposals.
Insurers faced a Monday deadline for filing proposed property insurance rates based on the new law, which increases access to cheaper backup insurance for the companies. Most insurance companies buy large amounts of reinsurance to insulate them against big hurricane losses.
But with rates spiraling upward after the busy 2004 and 2005 hurricane seasons, lawmakers this year expanded the state's Hurricane Catastrophe Fund to allow insurers to get more of their backup coverage there; it's cheaper than private coverage. The law says insurers must then pass on those savings to their customers.
State insurance regulators haven't compiled a complete list of all the filings, which have been trickling in over the summer but were due by Monday. But of the filings that have been released, more than 30 call for rate increases, rather than decreases.
Allstate Floridian Insurance Co., for example, is asking regulators for a 41.9 percent rate increase.
Allstate Floridian vice president George Grawe said the company did get cheaper backup coverage from the state's catastrophe fund, but still had to purchase lots of very expensive private reinsurance. He also said the company's customers weren't paying enough before, and the back-to-back blasts of 2004 and 2005 made that clear. After those two years, the company didn't have any capital left.
"The rates that we had before were not adequate,'' Grawe said. "We had some pent-up rate need. The key here is to make sure you have the money to pay claims.''
Among other large insurers, USAA has filed for an increase of more than 50 percent, and Florida Farm Bureau, a roughly 30 percent increase.
Insurance Commissioner Kevin McCarty has already notified several companies that have filed for rate increases of his intent to deny them.
Crist said that's the state's answer to companies that he believes are flouting the new law's requirement - to deny rate filings.
"He's doing great work, the commissioner is, he keeps rejecting the increases, accepting the decreases on the rates,'' Crist said of McCarty. "And that's exactly what I think he should be doing.''
Sen. Bill Posey, an architect of the law that was expected to bring down property insurance rates, notes that a number of companies have filed for rate decreases. Lawmakers shouldn't be criticized yet for not doing enough because the issue isn't settled, said Posey, R-Rockledge, noting that the companies can't charge higher rates without regulatory approval.
Insurance industry officials also say that some of the expected rate decreases were never agreed on by insurers, and that some of the expectations are unrealistic.
"Some of those numbers are numbers that were promised by politicians making promises; companies didn't make any specific promise,'' said Gary Landry, vice president of the industry group the Florida Insurance Council.
Landry also said that the requests are just that until the regulatory process plays out.
"That's the purpose of these rate hearings, so that companies will have to present ... their reasons for whatever rate they're filing for,'' Landry said. "And if they can justify it - it needs to be approved.''
REDUCE YOUR WIND STORM PREMIUMS BY HAVING A WIND MITIGATION INSPECTION....SAVE $$$$
GOLD COAST INSPECTIONS 954-753-3755
Comments(1)