Insurers see Slight Progress, Missed Opportunity in Session

May 11, 2011

The following article was published in the Sunshine News on May 11, 2011:

Insurers See Slight Progress, Missed Opportunity in Session

By Gary Rohrer

Legislators delivered for most Florida businesses in the 2011 session, as much of their agenda is making it into law. But there was one glaring exception — insurance companies.

Businesses received a windfall of tax breaks and deregulation, but private insurers, whose prices are set by the Office of Insurance Regulation, were not invited to the party.

Despite a pro-business governor and veto-proof Republican majorities sweeping into office after the 2010 elections, insurers with hopes of reforming the industry were thwarted by lawmakers wary of the anti-tax, anti-fee environment.

The one significant win for property insurers was SB 408, which Gov. Rick Scott is likely to sign, imposing greater restrictions against fraudulent sinkhole claims, and ensuring that money from claims goes to sinkhole repairs.

But reforming the state-run Citizens Property Insurance Corp. is seen as the Holy Grail for private insurers, who had high hopes of getting it done this year.

“This legislation heads in the right direction and lays the foundation for future property insurance reforms. It is our hope that future legislation will focus on reducing the subsidies provided to those in the government-sponsored Citizens Property Insurance Corp.,” said Lisa Miller, former deputy insurance commissioner and insurance industry consultant.

Even though the vast majority of Citizens’ funding comes from the premiums from its 1.3 million customers and is only slightly state-funded, private insurance companies have complained that a three-year rate freeze that ended in 2009 and the lack of a requirement for Citizens to have actuarially sound rates create an unfair competitive advantage for a company that was designed to be a backstop.

“It was supposed to be an insurer of last resort; instead, it is an insurer of first resort,” said Associated Industries of Florida CEO Barney Bishop.

Bills that would have allowed Citizens to increase its rates as much as 25 percent this year and prevented the company from insuring expensive, million-dollar properties, died, as lawmakers shied away from anything that smacked of a tax increase or fee hike.

Leading the charge against insurance reforms was Sen. Mike Fasano, R-New Port Richey, who managed to help kill the Citizens’ bills and water down SB 408 by stripping a provision that would have eliminated the requirement for property insurers to carry sinkhole coverage.

In Senate floor debates he said the provision would lead to further economic disaster because mortgage companies would refuse to lend to people who weren’t able to get sinkhole insurance, once again disrupting a housing market that is barely getting back on its feet after the recent bubble burst.

Lawmakers also killed a bill that would have limited damages for personal injury protection (PIP) claims for medical and legal expenses, as well as cracking down on PIP fraud, which is becoming a cottage industry in Florida. A report from the National Insurance Crime Bureau released last month showed there were 2,779 questionable claims or possibly staged auto accidents in the Sunshine State in 2010, a 119 percent increase over two years.

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