Senator Jeff Atwater: Time insurance companies keep promises to homeowners
Jan 31, 2008
Senator Jeff Atwater: Time insurance companies keep promises to homeowners
January 31, 2008–South Florida Sun-Sentinel
By Jeff Atwater
Exactly one year after Gov. Charlie Crist signed legislation to lower property insurance premiums, the Florida Senate has convened a special Select Committee to investigate why certain insurance companies are not passing the savings on to policyholders, as required by law.
In December, I called for the creation of a Senate Select Committee on Property Insurance Accountability. The purpose of the committee is to uncover why insurance companies failed to lower premiums after the state took on a substantial portion of risk. We have now notified selected insurance company executives that we will require them to testify under oath about their pricing practices and increased profits.
The committee initiated our work last week with expert testimony from J. Robert Hunter, a former Texas insurance commissioner and high-ranking official in both Republican and Democratic administrations in Washington. Hunter told the Select Committee that, had certain insurers followed the law, their customers would have seen bigger premium reductions.
Insurance companies testified a year ago that the biggest reason for mounting rates following the 2004-2005 hurricane seasons was the cost of reinsurance — coverage insurers themselves purchase for catastrophic events. To help alleviate this burden on Floridians, the state agreed to provide reinsurance at a fraction of the price charged by commercial reinsurers with the understanding that 100 percent of the savings would be passed along to consumers.
Hunter concluded that instead of passing along the savings to Floridians, a number of large insurance companies wrongfully diverted those discounts to other purposes, including: excess profits, buying back stock and purchasing unnecessary excess reinsurance from related or parent companies at inflated prices.
State Insurance Commissioner Kevin McCarty was careful to indicate that not all companies failed to reduce rates. McCarty presented a list of companies that cut premium costs to their customers by 20 to 30 percent. By contrast, the insurance commissioner pointed out that the better known, national brand-name insurers had offered far smaller decreases, and some had the audacity to seek rate increases, which the state quickly denied.
Floridians have serious questions about what happened to the savings we were promised. Those insurance companies that received the benefit of placing their reinsurance risk on the backs of the people of Florida in exchange for rate relief now owe our citizens some answers. Those answers should lead to fair and honest dealings with policyholders. The Select Committee is not out to arbitrarily punish insurers. But we are determined that all Floridians should see the relief they were promised, and we will pursue that goal with the full force of the law.
That’s why our Select Committee is holding public hearings and putting witnesses under oath. The Legislature is pressing hard to alleviate the burden on homeowners. It’s time for insurance companies to hold up their end of the deal.
Sen. Jeff Atwater, R-North Palm Beach, is co-chair on the Select Committee on Insurance Accountability.
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