THE NEWS SERVICE OF FLORIDA: Property Insurance Claims Bill Moving in Senate

Mar 10, 2010

THE NEWS SERVICE OF FLORIDA published this article on March 10, 2010.


THE CAPITAL, TALLAHASSEE, March 10, 2010…A bill that would let property insurance companies pay claims in installments to make sure homeowners are actually using the money for repairs and make other changes survived its first committee vote Wednesday after efforts to change the bill were unsuccessful.

Property insurers say the measure (SB 2044) approved 7-3 by the Senate Banking and Insurance Committee is necessary for their survival.

The bill would allow insurers to withhold up to 50 percent of payments for roof replacements, structural repairs and the loss of personal property. Companies must now pay 100 percent of replacement costs up front, a procedure insurers say raises costs because homeowners can receive the payments and not have the work done.

The bill also allows insurance companies to raise rates up to 10 percent to account for inflation and other factors determined by the Office of Insurance Regulation without having to receive OIR’s approval.

Lawmakers have been trying to give the industry more autonomy in rate making, complaining the agency has been too tight-fisted in its approach to rates that company officials say are artificially low and inadequate to allow them to raise the surpluses they need in advance of a storm.

Critics say the measure makes too many concessions to the insurance industry and would prevent homeowners of moderate means and credit access from completely replacing their belongings. Opponents also don’t buy the argument that the changes are needed to prevent an industry-wide meltdown.

“This is a freight train heading for consumers,” Waldo Faura Sr. a community activist with Miami-based Floridians in Action, which works for lower insurance rates, said in testimony Wednesday.
Others complained that it changes rules on policies already in place.

“People were given a policy and told what they would do if they had a claim,” said Sen. Mike Fasano, R-New Port Richey, who voted against the bill. “Under this, that would no longer be the case.”

Committee chairman Sen. Garrett Richter, R-Naples, said reducing private insurers’ costs will ultimately translate into more stable rates for policyholders. Richter called inaccurate claims that insurance companies would somehow be off the hook for replacement cost repayments. Timing of the payment is the only change.

“In no way does this bill present barriers for consumers,” Richter said.

Industry representatives say lawmakers went too far after the 2004/2005 hurricane seasons to ensure policyholders got their money quickly. In 2005, lawmakers prevented companies from holding back any reimbursement amount. The result, they contend, is that some homeowners take the check and never get the work done.

“We know that there are items that will not be replaced,” said Mark Delegal, a lobbyist for State Farm, who cited “Barney the Dinosaur” videotapes as items a homeowner may not want to replace as the kids head off to college.

The bill now travels to the Senate General Government Appropriations Committee. There is currently no House companion.