Reformers see ‘bad faith’ in new filings
By Paige St. John
news-press.com capital bureau
Originally posted on June 28, 2007
TALLAHASSEE — Florida’s insurance rates, promised by Gov. Charlie Crist to drop by nearly a fourth, are in fact heading up.
The possible increases come instead of cuts to premiums that have doubled and even tripled the cost of homeowners insurance in the hurricane-prone state.
Florida Farm Bureau, for instance, seeks a 30.3 percent increase that with regulatory approval would negate the company’s just-implemented cut of 24.5 percent. Hartford Midwest has filed for a 46.4 percent hike that, if approved, would erase a 21.9 percent decrease.
“It doesn’t make sense,” said consumer advocate J. Robert Hunter, former Texas insurance commissioner hired by the state earlier this year to calculate savings from radical expansion of Florida’s hurricane fund.
“I just feel like it’s bad faith ... they’re playing some kind of game.”
Florida’s Insurance Consumer Advocate Bob Milligan shared Hunter’s concern.
“I don’t know what to attribute it to and won’t until I have a chance to look, but it needs to be looked at,” Milligan said Wednesday. “It’s another damn thing on the plate.”
Crist called Florida lawmakers into special session in January to provide “meaningful” relief to Florida homeowners. At his urging, they doubled the size of the Florida Hurricane Catastrophe Fund, adding $12 billion of cheap backup coverage the state would sell to insurance companies.
In trade for assuming that tremendous amount of hurricane risk, Hunter and state regulators estimated, Florida homeowners could expect average premium savings of 24 percent.
The first round of rate cuts, required by this month, instead averaged 12 percent, causing Crist this week to say he’d hoped it would have been more.
Insurers are required to submit a second round of rate filings by September to reflect the actual benefit of consumer backing. Instead of yet-deeper cuts, as regulators had promised, the new filings show dramatic hikes.
Coral Insurance kept that promise, filing on Monday for an additional 9.7 percent decrease atop 21.7 percent cuts already given its 14,000 policyholders.
But at least 13 companies so far seek increases, going as high as 95 percent by tiny Sentry Insurance, a mutual insurer with 1,500 policies. The Office of Insurance Regulation must approve the filings, and has begun to schedule public hearings.
Hartford claimed it was forced to pay twice for reinsurance coverage it bought from both the state and the private market. Cincinnati Insurance contended that regulators’ rejection of previous hikes left its rates at “an unsustainable level.”
“That reversal of our previously approved rates did not account for the fact that we experienced no expense savings resulting from the new reinsurance available through the state,” senior underwriting specialist Melissa Butler contended in Cincinnati’s filing.
Rather than lower rates, one insurer is pulling out, dropping 6,219 homeowners policies starting in 2008.
State Auto last week told agents that “political rhetoric” and legislative changes “severely jeopardize our future ability to meet obligations for all of our policyholders...
“It has become clear that we simply will not be permitted to charge the rate that would be needed in order to cover our losses over an extended period of time.”
Crist’s office did not immediately respond Wednesday, but others were dumbfounded by the possibility of net rate hikes.
“It’s astounding,” said Senate Banking and Insurance Chairman Bill Posey. The Rockledge Republican was among the chief architects of the Legislature’s risk-for-rates swap.
“Instead of reducing rates, we’re going to increase them 90 percent? The math doesn’t work,” Posey said. “I think they’re sandbagging again, like they did before. The word for it is obscene.”
Financial advisers warn the doubled Cat Fund poses a threat to consumers statewide if Florida were hit by a catastrophic hurricane. There is a predicted 2 percent chance of a $31 billion storm that would wipe out the fund and leave households with a $280 bill, every year for 30 years.
http://www.news-press.com/apps/pbcs.dll ... 27085/1075
They have so much money and legal representation that we have no chance at reduction.. Christ was fooled..rookie.
j/k 
