Insurance firms have friends in the state Senate

Feb 26, 2011

The following article was posted to on February 26, 2011:

Insurance firms have friends in the state Senate

“Laws, like sausages, cease to inspire respect in proportion as we know how they are made.” — Prince Otto von Bismarck, chancellor of Germany (1871-1890)

A group representing Fair Insurance Rates in Monroe got a lesson in the chancellor’s civics lesson this week in Tallahassee.

Led by Monroe County Mayor Heather Carruthers, the six Keys residents, business owners and elected official went to testify before the Senate Banking and Insurance Committee. The Tuesday session was to discuss sinkhole coverage that’s part of a major insurance rewrite bill called Senate Bill 408.

Instead of opening the floor for public testimony, the committee adjourned without taking action — leaving some citizens fuming on the sidelines.

“It was clear to me from the beginning of the meeting that their minds were made up,” Carruthers told Keys Sunday Editor Karen Quist just before boarding a plane for the return flight to the Keys.

In prepared remarks she never got to deliver, Carruthers wrote that “SB 408 does not address at least five of the fundamental problems that have created the insurance crisis in Florida. And, moreover, will actually hurt consumers in at least five ways.”

What Carruthers hinted at and others have observed is this hard truth — hurting consumers doesn’t seem to deter bad legislation from being cooked up in the back rooms of the state capitol. This is especially true when it comes to insurance legislation from an industry notorious for the money spent on lobbying and contributions to political campaigns.

State Sen. Mike Fasano, R-New Port Richey, tried unsuccessfully to introduce amendments that were more “consumer friendly,” but even he couldn’t get past the industry juggernaut.

Insurance industry “experts” who did get to testify cited a flood of sinkhole claims as a big financial squeeze. “Our financial position has deteriorated over the past few years,” Adam Swope, a State Farm actuary, told the committee. “This company has lost a substantial amount of surplus despite having no hurricanes.”

Earlier this year, State Farm filed for a 27.9 percent increase statewide in residential homeowner insurance rates, and a 95.7 percent increase for renters insurance. Steven Alexander, the state’s consumer advocate, described State Farm’s request as “bloated.” State Farm is the largest private insurer of property in Florida.

Provisions of SB 408 that pose special hurdles for Keys policy holders include a tightened window to file claims following a disaster, withholding replacement cost payments until repairs have been completed, and putting limits on discounts previously recognized for mitigation efforts (things like hurricane shutters, hardened windows and doors, new hurricane-code roofs).

A House bill making the rounds in Tallahassee would allow insurance companies to raise rates without going through a hearing, and would restrict the oversight role of the state’s Office of Insurance Regulation. If it’s not clear by now, the Tallahassee lawmakers who control key committees dealing with insurance have already bought into the industry’s lament of lost profits and eroding margins.

That drives home ol’ Chancellor Bismarck’s trenchant observation that making laws is too much like making sausage — it’s not pretty to watch. And the end result is too often not good for you.

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