Fla. Commissioner: Get Rid of Arbitration Panel

Florida Insurance Commissioner Tom Gallagher had harsh words for the arbitration panel that recently granted State Farm big increases in rates for homeowners coverage. Expressing his disappointment in the panel’s actions, Gallagher said he would work to eliminate the arbitration panel during the next legislative session. Following is Gallagher’s official statement regarding the panel ruling:

“I’m deeply disappointed by the arbitration panel’s recent decision to grant a 42.5 percent rate increase for many State Farm policyholders this year and the next.

“What’s more astounding is that the arbitration panel allowed State Farm to bring in new data to support its rate increase despite the fact that State Farm failed to supply state regulators with this critical data in their original rate filing. It is unacceptable that there are no consequences for State Farm’s failure to provide this data to state regulators.

“The panel’s recent decision just confirms that insurance companies can use the arbitration panel to bypass state regulators. Using a process that is not accountable to the public is a disservice to consumers and hinders the department’s ability to ensure that rates are adequate but not excessive.

“In reviewing the department’s options in response to the panel’s ruling, I have determined that any attempt to appeal the ruling would prove unsuccessful. My predecessor appealed two rulings by the arbitration panel and failed at both attempts because Florida law specifically states the panel’s decisions are final and binding. Clearly, the problem lies with Florida law.

“The panel’s onerous decision strengthens my resolve to pursue legislation to eliminate the arbitration panel during the next legislative session. I firmly believe that the authority to set rates belongs in the hands of regulators who are bound by the parameters of state law and who are required to act in the public’s best interest.”

Topics Florida