Florida Governor Rallies Against P/C Insurers, PCI Responds

On Tuesday, at a Cabinet meeting in Tallahassee, Florida Gov. Charlie Crist stated that he is in favor of having insurance company executives testify under oath before the Legislature about why they're not lowering prices for consumers. 
 
"It's a new day, and they're not getting their way anymore," Crist said the meeting. They should not be able to run this Capitol anymore." 
 
In addition, on Tuesday, state insurance officials rejected a proposed 7 percent rate reduction by State Farm Florida Insurance Co., saying that Florida's largest private insurer of homeowner policies can push prices even lower.  
 
This comes in the wake of three dozen property insurers asking Florida officials to approve significant increases in insurance prices, flying in the face of commitments issued by Crist and legislators to the state's homeowners earlier this year that rates would decline. 
 
Crist suggested the industry may be acting in collusion to keep rates high, promising to subpoena more documents from insurance companies to challenge their rate filings. He said some firms are "gaming" the state. 
 
PCI Responds to Crist 
 
Following is a statement in a press release made by the Property Casualty Insurers Association of America (PCI) in response to Crist’s statements: 
 
Governor Charlie Crist today railed against Florida’s insurance companies, claiming that they are ‘playing games’ with Florida consumers and intentionally not honoring the reforms mandated by the Florida Legislature in January of 2007.  
 
“The only game being played is by our governor, gambling on the future of Florida by not adequately planning for catastrophic storms, leaving our families and homes vulnerable. 
 
“Consumers have not seen savings anywhere near those promised by the Governor because the ‘reforms’ enacted during the Special Session ignored the economic reality that hurricanes present to all Floridians. The fact is, Florida has more coastal property – nearly $2 trillion worth – exposed to more frequent and severe storms than anywhere in the world.  
 
“From the beginning, we have warned that the ‘reform’ measures were flawed and would only cripple the market that is supposed to offer protection and peace of mind for Floridians. We also questioned the promised rate reduction, because every insurance company operates differently, and the government cannot simply pull a number out of thin air and apply it to everyone. Insurance companies are in the business to protect Floridians – their families, homes, and valuables possessions. Relying too heavily on the state’s reinsurance program without considering other factors does not allow companies to prepare for the ‘worst case scenario’. Therefore, many companies chose to take extra protective measures and ensure that every policyholder’s claim will be paid without the need for a taxpayer bailout, like the governor’s insurance company, Citizens.  
 
“The member companies of PCI have followed the spirit and the intent of the law and will continue to do so. However, the reforms do not change the facts. Florida has more hurricanes than anywhere else and has more homes, businesses and families exposed to catastrophic losses from these storms.  
Any long term solution to the property insurance problem in the state must take into account measures that reduce exposure to such losses (tougher codes for new construction and financial incentives to retrofit existing homes); reining in the state’s ability to sell under-priced policies and transfer the risk of paying for future claims to unwitting consumers throughout the state; and more clearly defining the role of the federal government to provide liquidity protection to the state in the event that a major storm exceeds the capacity of the Florida Hurricane Catast