Fla. Senate Makes Recommendations on Property Insurance Accountability

The Florida Senate Select Committee on Property Insurance Accountability wants to restrict reinsurance costs in rates and strengthen the excess profits law among other things.

Co-chaired by Sen. Jeff Atwater, R- North Palm Beach, and Senate Democratic Leader Steve Geller, D- Hallandale Beach, the committee published a list of recommendations Thursday after hearing testimony from three groups on three separate occasions over the past few months.

Stopping short of making official recommendations, citing the onset of the 2008 regular legislative session, the select committee submitted instead, “proposals that should be considered by the standing committees.”

Included among the committee’s proposals:
• Extend temporary prohibition on insurers making “use and file” rate filing.
• Require rates be based on hurricane loss models approved by Commission on Hurricane Loss Projection Methodology
• Require that approved models be used by an insurer in determining its probable maximum loss
• Require or authorize the Florida Office of Insurance Regulation (through the Financial Services Commission) to adopt rules establishing standards for allowable profit and contingency factors in rate filings
• Prohibit rates from including reinsurance costs that duplicate coverage provided by the Florida Hurricane catastrophe Fund, regardless of the effective date of coverage
• Provide criminal penalties for insurance officials who knowingly, with intent to deceive, make false statements or reports to the OIR
• Require insurers to certify in a rate filing the number of policies they intend to non-renew and to calculate the reduced risk into their rates
• Strengthen the excess profits law

Florida Senate President Ken Pruitt, R-Port St. Lucie, appointed the committee on Jan. 10, for the purpose of gathering testimony, under oath, from property and casualty insurance company executives and other industry experts.

At the root of the committee’s implementation were concerns over insurance industry pricing practices in Florida and “increased profits associated with escalating rates,” according to Pruitt.

On Jan. 22, Florida Insurance Commissioner, Kevin McCarty, testified before the committee alongside J. Robert Hunter, director of insurance for the Consumer Federation of America. On Feb. 4-5, executives from five insurance companies including Allstate, Nationwide, Florida Farm Bureau, the Hartford Group and American Strategic Insurance Co., presented testimony. Lastly, on Feb. 19, the committee heard from reinsurance expert, Paul Walther of Reinsurance Directions, representatives of the Florida Commission on Hurricane Loss Projection Methodology and hurricane model developer AIR Worldwide Corp.

While McCarty applauded the committee’s efforts, Sam Miller of the Florida Insurance Council said their recommendations “ignore the serious financial warnings raised before the Banking & Insurance Committee and fly counter to so far successful efforts by the state to attract new insurers to Florida to help control the growth of Citizens Property Insurance Corp.”

Source: Florida Senate

Topics Florida Hurricane Reinsurance Property Politics