Florida home insurance legislation mainly favors the insurers

(SUN SENTINAL)   The main property insurance legislation gaining momentum this year in Tallahassee is a departure from laws passed in 2007 and 2008 that aimed to lower homeowner insurance premiums and beef up the state’s authority to hold insurers accountable.
And most of the bills this year are supported by insurance groups.

Of the 36 homeowner insurance bills proposed by the Legislature, half would benefit insurers — a dozen of which already have passed at least one legislative committee. Four of the 18 that don’t benefit insurers also have traction.

For instance, legislation proposed by Sen. Bryan Nelson, R- Apopka, that passed the House insurance committee earlier this month would, among other things:

Increase rates of state-backed Citizens Property Insurance by up to 20 percent for individual policyholders; Allow private insurers to automatically increase premiums by up to 10 percent a year with minimal state scrutiny;

Prevent regulators from limiting how much insurers spend on advertising costs or insurance agent commissions; and

Allow insurers to require public adjusters hired by policyholders to represent them in claims disputes to take sworn statements under oath.

Nelson said his bill includes items needed to draw insurers to the state and reduce taxpayers’ risk if a major hurricane strikes. All home and automobile policyholders in Florida pay fees to offset deficits in state insurance entities, such as Citizens.

“We understand the times are tough, and we don’t want to place an undue burden on our constituents, but we gotta have actuarially sound rates,” said Nelson, an insurance agent.

Thirteen of the two dozen Florida lawmakers proposing property insurance bills during the 60-day legislative session that ends May 1 are pitching measures that benefit insurance companies. Nelson tops the list of the two dozen legislators in insurance-related campaign contributions last year with $28,295, which is 17 percent of his total contributions.

The question is “would actions such as introducing a bill, or speaking out in committee on behalf of a big donor, have been taken in the absence of a contribution?” Beth Rosenson, an assistant political science professor at the University of Florida, wrote in an e-mail.

Nelson said he doesn’t pay attention to how much money he receives from insurance companies.

“I’m a private market sector guy,” Nelson said. “I’ve got no idea how much money I have from insurance companies. But I always look at small business as my ally.”

The Senate insurance committee gave a greenlight Monday to its main insurance bill, sponsored by its chair, Sen. Garrett Richter, R-Naples.

Richter’s bill includes a provision to increase Citizens rates by no more than 10 percent a year for individual policyholders. But the Senate committee deleted an automatic rate increase provision after fierce opposition from Senate President Pro Tempore Mike Fasano, R-New Port Richey.

House and Senate insurance committees also passed a measure that would allow large property insurers to offer policies that are exempt from most pricing regulation. People who pick the less-regulated policies will be expected to pay higher premiums but would be exempt from paying annual fees to offset Citizens’ deficits.

Bill Proctor, R-St. Augustine, said he proposed the House version of the bill to address concerns about major insurers scaling back or leaving Florida. State Farm Florida, the state’s largest property insurer, announced Jan. 27 that it’s leaving Florida within two years.

He said he first pondered lifting some insurance rate regulation after a retired National Guard helicopter pilot contacted him more than a year ago to say United Services Automobile Association, which mainly offers insurance coverage to military families, was dropping him because it didn’t get its rate request approved.

With about three weeks left in the legislative session, Florida residents and their advocates can still weigh in. Bills must be approved by the full House and Senate before Gov. Charlie Crist considers signing them into law.

“I’m a free market guy, but I think we need to keep our eye on insurance companies, property insurance companies specifically,” Crist told reporters last week when asked about insurance rate increases. “They have a history of not being the kindest, warmest industry to the people of Florida.”

Property insurance premiums doubled and tripled in some cases after the 2004 and 2005 hurricanes in Florida. Brad Ashwell of consumer advocacy group, Florida Public Interest Research Group, said bills drafted since then to prevent more increases were “watered down” by the time the governor signed them into law.

“The legislation has been a series of baby steps taken to be very sensitive to the needs of the industry,” Ashwell said.

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