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The Senate Banking and Insurance Committee this morning approved a bill that would extend a cap on premiums for homeowners insured by the state-run Citizens Property Insurance Corp.
Minutes later, they approved another bill that could result in an increase for everyone else.
A conflict?
After nearly 24 hours of testimony from insurance executives last month about why premiums haven’t dropped, state Sens. Jeff Atwater, R-North Palm Beach, and Steve Geller, D-Cooper City, released a list of proposals this morning they’d like to see their chamber consider this session.
Among the changes: Require companies to use hurricane projections approved by the state; establish standard allowable expenses insurers can charge to cover re-insurance costs; and increase the fines for companies that violate the insurance code.
See all the proposed changes here. Here’s a copy of the memo to Senate President Ken Pruitt here.
One month after state Senate leaders put insurance executives from Allstate and Nationwide under oath to explain why they haven’t dropped premium costs, House Rep. Don Brown said he’ll do the same to the state employees at Citizen’s Insurance Corp.
Brown, chairman of the House Insurance Committee, said he invited Citizen’s CFO Sharon Binnun, Government Affairs Director Christine Turner and the state-run insurer’s actuary to explain to the committee on Friday the “extent of assessments in the event of hurricane losses during next hurricane season.” He’ll ask them to give their answers under oath.
“All we want to do is be fair to everybody,” Brown said.
State lawmakers focused much of their work last year on establishing an early presidential primary and crafting a property tax cut for the same ballot.
This year, their motivation could come from another election date: their own.
Read the entire story here. See today’s front page here.
Also, check out the graphic from today’s paper that gives a
snapshot of House lawmakers plans for this year and a list of priorities inside the Senate. Do any of these bills have a chance to pass this year?
Property insurance premiums could increase 2 percent across the state and more in South Florida under a proposal from CFO Alex Sink that easily cleared its first hurdle today in the state House.
The change could mean a bump in windstorm premiums, but supporters said the bill would also save Floridians $5 billion in assessments over 30 years if a major storm hit the state.
Also on the op-ed page today, the Post’s editorial board calls for state lawmakers to keep the grill fired up for insurance companies.
For politicians and regulators, the frustrating thing is that the insurance industry always has a new story. For years, most companies based rates on 1-in-75-year or 1-in-100-year storms. Now, says spokesman Adam Shores, Allstate Floridian must set rates based on two 1-in-100-year storms in the same season. Given that worst-worst-case scenario and assuming mega-catastrophic damage, Allstate could get around any attempt by the state to lower rates, and Floridians would be paying what for some would be prohibitively high premiums.
House Insurance Committee Chairman Don Brown wondered this morning if the $2 billion in cash that the state-run Citizens Property Insurance has collected in premiums and assessments in the past two years amounted to “excess profits.”
“If I remember correctly, after the ’05 storm season they were broke,” Brown said during a committee workshop this morning. “Don’t you think that sounds like excess profit and they have to give it back?”
He added: “Of course, the point is, if they’re not able to accumulate some reserves in the good years, they won’t have money to pay claims in the good years. Ironically, that same principle probably applies to the private sector, too.”
Florida homeowners could be forced to fix their roofs and install hurricane-proof windows as a condition for keeping their policies with the state-backed Citizen’s Property Insurance Corp. under a change being pushed by House Speaker Marco Rubio.
“Basically if people can afford to, you make them do it,” Rubio said in a recent interview. “If they can’t afford it, you give them a low-interest or a no-interest loan. And if they can’t pay back the loan because they’re so poor, then in some cases we’re better off paying for this mitigation than funding or subsidizing Citizens in the long run.”
Allstate officials, pictured above left, testified this morning that their rate hikes were appropriate, despite new laws that offered private companies significantly cheaper re-insurance from the state.
Sen. Jeff Atwater, head of the select committee, focused his questions on an internal presentation the company made after the new law was passed. Atwater questioned officials over a footnote that he said seemed to imply the company would adjust its estimate of hurricane-related losses if the new law resulted in savings for their customers.
The select Senate insurance committee meeting where Allstate and Nationwide officials are expected to testify under oath about why they are not charging less for homeowners insurance just got underway.
The meeting started about 30 minutes late. Sen. Jeff Atwater, the North Palm Beach Republican heading the committee, said his co-chairman, Democratic Sen. Steve Geller, would be absent until tomorrow due to a family emergency.
The meeting, previewed here, is expected to last until 6 p.m today and continue tomorrow.
Meanwhile, several House lawmakers will insert their voices into the insurance debate during the committee’s lunch break.
A day after asking the presidential candidates of both parties whether they would support the national catastrophe insurance bill that passed the House last year, U.S. Rep. Ron Klein said he’s received responses from Democratic candidates Hillary Rodham Clinton and Barack Obama that they do.
“I am very pleased that Sen, Clinton and Sen, Obama have lent their support to the Homeowners’ Defense Act,” Klein said in a staement.
“By passing legislation in the House of Representatives, and elevating the issue to the national level, we are making unprecedented progress towards alleviating the insurance burden of homeowners.”
There’s been a lot of talk about where the presidential candidates stand on the issue of a national catastrophe fund. U.S. Rep. Ron Klein wants all the candidates — Democrats and Republicans — to take a more definite stand:
Would they support the Homeowners’ Defense Act (H.R. 3355), passed by the House last year and pending in the Senate?
Klein and U.S. Rep. Tim Mahoney, both Democrats from Palm Beach County, authored the bill, but the House adopted a major amendment offered by U.S. Rep. Ginny Brown-Waite, a Republican from Brooksville, that expanded the bill to include a national catastrophe fund.
Gov. Charlie Crist reiterated his advice to Floridians to shun Allstate Insurance companies and showed little empathy this morning for companies’ 1,200 agents and salesmen in the state whose income will be impacted by insurance regulators suspension of Allstate’s ability to write new auto insurance policies.
“It’s too bad they work for such a bad company,” he said when asked about the employees’ future.
A Senate select committee issued letters to five insurance industry executives on Tuesday ordering them to appear under oath next month to answer questions about property insurance rate filings.
The letters were sent to execs of Hartford Insurance Co., American Strategic Insurance Co., Nationwide Insurance Co. of Florida, Florida Farm Bureau insurance companies and two Allstate Insurance Co. Florida subsidiaries.
The letters were sent within hours after Office of Insurance Regulation Commissioner Kevin McCarty halted a scheduled two-day hearing after just three hours of testimony from Allstate executives, calling the company’s representatives refusal to hand over documents regarding its rate filings “a slap in the face” to regulators.
“We recognize that your schedule is busy and that you may not be able to be present for the full two days of hearings. Thus, when you contact the Senate to confirm your appearance and discuss your schedule, we will provide an approximate time range for your particular testimony before the Committee. However, it is our expectation that, in addition to your testimony, a senior member of your management team will attend the full two days of meetings in order to hear all of the testimony and answer additional questions Senators may have for your company after others testify,” the letters, sent by Select Committee on Property Insurance Accountability co-chairmen Jeff Atwater, R-North Palm Beach, and Steve Geller, D-Cooper City.
Sens. Steve Geller, Jeff Atwater and Bill Posey, pictured left to right above, announced this morning a 20-member committee that will put insurance company executives under oath next month to testify why premium prices have not decreased as the state has assumed more risk in paying for catastrophes.
Atwater, facing a possible challenge from Democrat Skip Campbell for a Palm Beach County district that has been whacked by increasing insurance costs, gave a preview of this move in a speech last month when he was crowned Senate President Designate for 2008.
Gov. Charlie Crist has asked three trial lawyers to sue some property insurers doing business in Florida, possibly with a class-action lawsuit, because he believes they are in violation of new laws passed by the legislature nearly a year ago.
Crist said today he has asked Dexter Douglass, Robert Hackleman and Roberto “Bobby” Martinez to figure out a way to sue property insurance companies. The lawyers have agreed to do the work for free, Crist said.
Crist said he wants the trio, who will work with Crist’s general counsel Paul Huck, to sue the property insurers and get homeowners refunds on what he believes were overpayments on premiums.
“I think they’ve been ripped off. I think these companies, I know, they have been greedy. I believe they have been unfair. I think the only way we can get some recourse and some justice on behalf of the people I serve is to take them to court,” Crist said.
Douglass, a Democrat, previously served as the late Gov. Lawton Chiles’ general counsel and was one of a cadre of attorneys involved in a successful class-action lawsuit against the tobacco industry.
Martinez is a member of the Florida Board of Education and was chair of Crist’s transition team, on which Hackleman also served.
In the midst of two hours of questioning this morning over Citizen’s Property Insurance assets in the troubled SBA investment fund, Citizens Vice President Sharon Binnun told the House Insurance Committee that maybe the state-run insurer — the largest participant in the pool — should have bailed along with hundreds of other local governments. She also said investments policies for the insurer are under review.
“I certainly did not anticipate the run on the pool, the fact that the pool would be frozen and that the amount that is now (isolated) is such a large dollar amount,” Binnun said. “In hindsight, I might have made a different decision.”
Yes, the Wall Street Journal editorial board still does not like the property insurance changes Gov. Charlie Crist pushed through the legislature this year. They are also not keen on U.S. Rep. Ron Klein’s Homeowners Defense Act.
This morning, they rip both on their opinion page, while plugging Jeb and state Rep. Dennis Ross. Here’s an excerpt:
The insurance market is working; Florida’s Governor simply didn’t like the price of private hurricane coverage. Now he may succeed in getting American taxpayers to pay for it, while destroying an American industry. As Mr. Crist’s predecessor Jeb Bush has wisely pointed out, government-run natural disaster insurance could be more devastating than the disasters themselves.
Full editorial after jump.
Florida CFO Alex Sink said this afternoon the state is putting too much at risk by offering cheap re-insurance to property insurers. The solution? Let the Cabinet, not the legislature, set prices for the state Hurricane Catastrophe Fund.
Sink wants lawmakers to make the change during the current special session.
The state Office of Insurance Regulation announced this morning it has reached an agreement with State Farm to reduce rates by an additional 2 percent in Florida, pay the state $1.5 million in attorney fees and refund $23 million in excess surcharges.
The additional 2 percent reduction comes on top of the 7 percent rate decrease State Farm implemented in the spring. The additional reduction will result in approximately $23 million in savings to their policyholders.
A copy of the settlement is here, or read the rest of the release after the jump.
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