State Senate OKs insurance bill; next step is House

Apr 17, 2008

Miami Herald--April 17, 2008


The Florida Senate passed a massive insurance bill with some consumer protections but no immediate steps to lower insurance rates.

Rates charged by the state-run insurer would remain frozen through June 2009. Then increases will be phased in over three years so that Citizens Property Insurance can bring in enough revenue to cover future claims.

It provides state insurance regulators with more authority to sanction private insurance companies and takes away some privileges these firms have enjoyed for many years, which industry experts say will make Florida a less friendly place to do business.

The bill would end a practice of companies being able to increase customers’ rates before final state approval. It would also make sure that home and business owners’ claims are paid within 90 days if there are no claim disputes.

The real work for lawmakers begins now. The Senate bill heads to the state House of Representatives where it can be accepted as is, amended slightly or totally revamped. So far, there has been little common ground between the Senate and House on what measures need to be taken this year to effectively regulate the insurance industry and help Florida residents carry the cost of home insurance.

”The fact that Sen. [Jeff] Atwater has offered us a suggestion of something we can do in the short-term is something we should seriously look at,” said Rep. Juan Zapata, R-Miami. “Our constituents back home want us to do something.”

Rep. Ron Reagan, a Bradenton Republican in charge of the House council that deals with insurance issues, was unsure if the House would accept the Senate bill. ”We find they have gone too far in some of the provisions,” he said.

The prevailing view among the House majority is to create a regulatory environment in Florida that encourages companies to write policies here. It views the Senate bill as doing just the opposite. That concern has been raised as well by some senators.

Atwater, the North West Palm Beach Republican senator who helped craft this bill, began lobbying House members right after the bill passed.

Atwater said making the insurance industry more accountable, shoring up Citizens and yet still providing an attractive market for private companies are key elements of the bill. ”I would hope the House would recognize” their importance.

As he presented the bill, which passed on a 32-7 vote on the Senate floor Wednesday, Atwater stressed the provisions could protect consumers from huge rate hikes. For instance, the bill would not allow insurers to use unapproved computer models as a base or to adjust their rate filings.

Many of the provisions in the bill stem from special Senate hearings headed by Atwater and Sen. Steven Geller, a Democrat from Cooper City. The computer models provision comes directly from the hearings because several insurers told the panel they adjusted their rate filings with data from unapproved models.

Insurance Commissioner Kevin McCarty championed the Senate bill. He said in a statement the bill would ‘stop insurance companies from bypassing my office and increasing rates through the use-and-file or arbitration processes. It also will increase the office’s authority to make certain that companies pay their policyholders’ claims on time.”

The Senate bill and one in the House contain a measure to take $250 million from the reserves accumulated by Citizens to fund a capital buildup program for young insurers. The House bill easily passed last week.

Citizens uses these funds to pay claims. At the urging of Florida Chief Financial Officer Alex Sink and Citizens officials, the bill was modified in recent weeks to say the money will be returned to Citizens over a 20-year period as the notes are repaid.

Both the Senate and House bills require the companies qualifying for the program to take at least 15 percent of their policies from Citizens.

Miami Herald staff writers Gary Fineout and Monica Hatcher and The Associated Press contributed to this story.