Florida State Representative Bill Proctor (R-St. Augustine) and Florida State Senator Bill Bennett (R-Bradenton) recently revived their efforts at deregulating property insurance rates in the Sunshine State.
Last year the two legislators’ “Consumer Choice” bill received overwhelming approval from Florida legislators (85 percent favored it), but it was vetoed by Gov. Charlie Crist (R).
While last year’s bill would have deregulated rates for larger, well-capitalized companies, the bill recently filed by Proctor and Bennett aims to deregulate rates for any private insurer—large or small—that chooses to participate.
The bill retains all the consumer protections and disclosure requirements of its predecessor, including mandates that companies educate consumers about their ability to choose between policies and companies whose rates are regulated versus those that are not.
Private Market Eroding
“What we have done in past years is put the state in the possibility of bankruptcy” by involving the state in backing property insurance, said Proctor. “This [bill] is to revitalize the private insurance market in Florida, which we know is eroding.”
“What we really wanted to do is trust the consumers, “added Bennett. “Anybody should be able to shop with any company they want.”
The state’s Office of Insurance Regulation would maintain nearly all its existing regulatory oversight, except its ability to deny a rate filing for excessiveness. This would allow property insurance rates for those new types of deregulated policies created by this bill to be based on the market and consumer buying habits, rather than government bureaucrats.
The state would still retain its ability to regulate for solvency to ensure premiums are sufficient so insurers are financially sound enough to pay claims.
Though vetoed, last year’s legislative passage of the “Consumer Choice Bill,” as well as another sweeping, market-freeing insurance reform package that was signed into law, signaled a major property insurance policy reorientation.
In 2007 Gov. Crist passed a series of reforms through the Republican-controlled legislature that drastically expanded the government’s intrusion into Florida’s property insurance market. The state-run insurer of “last resort”—Citizens Property Insurance Corporation—was unleashed to compete with private carriers; price controls were established; rates were artificially reduced and frozen; and massive amounts of reinsurance risk were transferred from private companies to taxpayers.
Those changes had noticeable effects on the market. Most large insurers have either cut back on writing insurance policies or have left the state altogether; the state-run insurer is now Florida’s largest property insurance provider; and half of the state’s remaining private insurance companies are losing money—without a hurricane having hit the state.
Christian R. Cámara ([email protected]) is director of the Florida Insurance Project at The Heartland Institute.