FL Senate Provides Proposals to Improve Homeowners Market

A special Florida Senate committee appointed to look into why the state homeowners insurance market has not met expectations after legislators offered more reinsurance last year, has submitted a list of informal proposals designed to curtail premiums. 
 
The state regulators applauded the efforts while the Florida Insurance Council, the state's largest trade association, said the recommendations "fly counter to so far successful efforts by the state to attract new insurers" to alleviate the burden on Citizens Property Insurance Corp. 
 
The proposals sent by the Senate Committee on Property Insurance Accountability to Senate President Ken Pruitt, R-Port St. Lucie, include: repulsion of the "file-and-use" option; requirements that insurers only use state-approved models; new standards for reinsurance calculations and non-renewal reporting; elimination of the arbitration process; and an increase in fines for insurers that violate the law. 
 
Insurance Commissioner Kevin McCarty issued a statement commending the senate committee and co-chairmen, Sens. Jeff Atwater, R-North Palm Beach, and Steve Geller, D-Hallandale Beach. 
 
Clarifications to the way insurers use hurricane models and establishing caps on profit and reinsurance costs "would protect consumers from unwarranted rate increases," McCarty said. 
 
The recommendations also outline measures giving the OIR more power. A company's refusal to comply with an OIR subpoena would allow McCarty to immediately revoke or suspend the insurer's certificate of authority. The OIR would also have the final say as to what documents from insurers are trade secrets and insurers could face criminal penalties for making false statements to the OIR, the senate committee report says. 
 
Meanwhile, the House Insurance Committee had a March 14 special meeting scheduled to discuss whether Citizens can pay claims following a hurricane. 
 
Don Brown, R-DeFuniak Springs, chairman of the house committee, called the meeting after reviewing testimony given to the Senate Banking and Insurance Committee. A financial adviser for the state's catastrophe fund and Citizens "expressed serious concerns that the necessary funds could be timely raised by the Cat Fund, Citizens and private insurers following a major hurricane this year -- because of the subprime lending crisis and a downturn in the national economy," said the Florida Insurance Council. 
 
The senate committee's informal recommendations "ignore the serious financial warnings" given during testimony, the insurance council added. 
 
Executives from Allstate, Nationwide, Florida Farm Bureau, Hartford Group and American Strategic Insurance Co. presented testimony before the senate committee in early February after the OIR and other state officials provided testimony to the state legislature, who then appointed the select committee in an attempt to seeks answers from insurers under oath about what legislators have called the industry's failure to pass along savings to consumers. Insurers were required by law to reduce rates after the state-run catastrophe fund was expanded by $12 billion to offset reinsurance costs. 
 
In 2006, the top five writers of homeowners multi-peril in Florida, according to A.M. Best Co. state/line product information based on direct premiums written, were: State Farm Group, with a 19.6% market share; Citizens Property Insurance Corp., with 17.6%; Allstate Insurance Group, with 7.1%; Tower Hill Group, with 4.7%; and Universal P&C Insurance Co., with 4.6%.