Florida needs private property insurance industry
June 16, 2009
Gov. Charlie Crist received the "State Farm" bill Friday and has until June 27 to sign it, veto it or let it become law.
Crist's rhetoric suggests he is wary of giving any insurance company more free rein, but we urge him to sign the legislation. It's voluntary, offers property owners the chance to keep the insurance company they want and the state an opportunity to rebuild its property insurance marketplace.
The State Farm bill, so named because it may persuade the largest private homeowners' insurer to reconsider its decision to stop selling property insurance here, would give a property owner the chance to select more expensive coverage, free from regulation, from a well-capitalized company that could actually pay claims in the aftermath of a major hurricane.
As it stands, Florida is rapidly approaching the moment when it will either grow a market of financially sound companies to sell property insurance, or it will fall to the state to provide coverage for all.
Today the biggest - and most expensive - insurer in Florida, the state-run Citizens Property Insurance Corp., handles more than 1 million policies.
It also can't afford to pay its policyholders for wind damage should one or more hurricanes hit the state this season. Instead, citizens across Florida will be forced to pay claims through assessments on most lines of insurance.
And as Rep. Bill Proctor, who ran the bill in the House, points out, no one in the state Department of Insurance can say what those assessments might be.
So for the folks who want to keep their insurance carrier and can afford to pay what that carrier would charge, this bill offers consumer choice. It would give homeowners the peace of mind that comes with being insured through a large company they know has money in the bank and the ability to efficiently pay claims.
Now it's true there are smaller insurers that have come into the market in the past year taking some 400,000 policies from Citizens, but it's not clear that they will be able to handle the claims if a Category 4 hurricane roars up Tampa Bay.
According to Sen. Mike Bennett, the sponsor in the Senate, 19 companies would qualify to sell property insurance. They would be required to post their rates online so consumers can make comparisons. The insurance department would not have to approve the rates, but it could reject a rate it found inadequate or based on dishonest figures.
There is no downside to the legislation, particularly if it is successful in helping Florida keep, or bring back, State Farm, Allstate, Nationwide and other carriers with good track records.
The state needs more private insurance companies and the private capital they bring. This is a good deal for consumers and the marketplace. Crist should sign it
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