The story about the Florida Senate’s efforts to chastise insurance providers for not sufficiently lowering insurance rates in an attempt by the Senate to lay the blame for high insurance rates on insurers alone. This is misguided and unfair. The state government also shares culpability.
The mechanisms under which insurance rates are determined are set by individual states. The goal of a state when determining insurance rates should be eliminating procedural barriers and encouraging competition whenever possible. Florida has a challenging and dynamic insurance market that could benefit from an infusion of new companies and innovative ideas. But Florida’s rate-regulation system stifles the ability of insurers to react to market forces, creating an environment unfriendly to business, which discourages providers from setting up shop instate.
The Senate’s aggressive stance is simply alienating insurers and guaranteeing the insurance environment in Florida will remain unfriendly. Competition should be welcomed, not stifled. The end result will be a more responsive market with more options and lower costs for consumers. The benefits of competition should not be underestimated.
Matthew Glans ([email protected])is legislative specialist for insurance and finance at The Heartland Institute.