Homeowner Insurance Reforms Stir Up A Lot Of Debate

Apr 23, 2008

Tampa Bay Online–April 23, 2008
By Carl  Orth | The Suncoast News

NEW PORT RICHEY, Fla. – Winds are blowing hard and dark clouds are gathering, but it’s not a hurricane approaching. A storm of debate is circulating around homeowner’s insurance reform.

Florida Senate Bill 2860 suggests several standards for writing policies, paying claims and raising fines on insurers.

But opinions vary widely about how the bill might hurt or help policyholders if private companies quit writing policies here.

The ball is in the court of the Florida House, which is reviewing the Senate bill.

A freeze of Citizens Property Insurance Corp. rates through July 2009 is about the only thing all sides can agree upon in the bill. Many West Pasco residents have coverage through Citizens. After that, Citizens rate increases would be held to no more than 10 percent a year through 2012.

Ginny Stevans remains lukewarm about the bill. Stevans is president of Homeowners for Affordable Coverage, the grass-roots organization which sprung up here to push for reforms.

State Sen. Mike Fasano, R-New Port Richey, believes the Senate bill is "very consumer friendly," according to Greg Giordano, Fasano’s chief legislative.

State Rep. John Legg, R-Port Richey, is still poring over the reams of pages in the complex Senate legislation.

"I have not looked at the details of the bill," Legg said. "But I fully support extending the rate freeze. I believe the rate freeze is highly probable. The remainder of the bill – it’s a very length bill – I cannot comment on."

"It seemed to be the best thing out there," Stevans said about her impressions of the Senate bill.
A step in the right direction, in Stevans’ estimation, would be getting rid of arbitration panels. The panels often sided with higher rates suggested by insurance companies, Stevans complained. After a trial ban last year, the Senate bill would permanently end the arbitration panels.

Stevans also heaps disdain on the practice of insurers raising rates in before a rate review by the state. The Senate bill would put an end to that. Stevans likened it to an employee telling a boss that the worker gave himself a raise six months ago.

"We’re not actually getting lower premiums, we’re getting less coverage," Stevans said about previous changes. Last year, Citizens was allowed to spin off sinkhole coverage as an optional rider to homeowner policies. The main policy still covers damages from "catastrophic ground collapse."

Looking at the big picture, Stevans worries about the risks the state might be assuming. "I strongly feel ala carting our insurance … is increasing our risk."

Some of the tougher standards in the Senate bill were inspired after Allstate refused to turn over documents to state regulators to justify an increase in homeowner’s rates. The state suspended Allstate from writing new auto insurance policies as a result.

"Allstate not only ignored the law, they ignored the Office of Insurance Regulation," Fasano said in a recent Tampa Tribune interview. "They didn’t comply. That’s why we have this legislation today, to protect the homeowner."

The provision to prevent insurers from raising rates before the state finishes its rate review, Fasano noted.

The Senate bill would dramatically increase administrative fines for "unfair insurance trade practices," Giordano noted. One fine, for instance, would go up from $20,000 to $100,000.

Other changes would increase the required notice of nonrenewal of a personal or commercial residential insurance policy from 100 days to 180 days.

If a company plans mass cancellations of policies, the Senate bill would require a company to get approval from regulators for a plan to not renew more than 10,000 policies within a one-year period.

"It is apparent that it will be a fight to the finish line between the House and the Senate this year," HAC officials predicted in a March 28 newsletter.