For Immediate Release
Property Insurance Deregulation: A choice too costly for consumers
By: Sean M. Shaw Esq., Florida Insurance Consumer Advocate
Brad Ashwell, Florida Public Interest Research Group, Democracy & Consumer Advocate
Bill Newton, Florida Consumer Action Network, Executive Director
Date: January 22, 2010
This has been a tough year for property insurance consumers in the State of Florida. 2009 brought Floridians problems from harmful Chinese Drywall to the threatened exit of State Farm. Now, two of Florida’s legislators, Senator Mike Bennett and Representative Bill Proctor, have proposed a bill to deregulate residential property insurance rates.
Senate Bill 876 and House Bill 447 claim to give consumers “greater choice” by allowing property insurance companies to charge unregulated rates to their residential customers. The proposed legislation also stipulates that no private insurer can be charged an assessment until of all Citizens’ policyholders have been charged a 15% assessment.
While these provisions are similar to the “consumer choice” bill introduced in the 2009 legislative session, unlike the previous bill, this legislation would allow all authorized property insurers in the state to charge any rate, not just a select few.
Citizen Overload
Senator Bennett has stated that he filed this bill in response the perception that Citizens’ legislatively set rates are driving private property insurers from Florida. Unfortunately, this bill does nothing to address Citizens’ rates, either through deregulation of Citizens or through any other mechanism. Allowing property insurers to charge unregulated rates would only serve to increase the divide between Citizens’ rates and what other companies can charge. If Senator Bennett and Representative Proctor are truly concerned about Citizens’ rates, it would make more sense for their legislation to directly address their concerns.
Does Deregulation Work
Proponents of deregulation claim that deregulation will bring new insurers to the market. However, no insurer has said publicly that they would enter Florida if the property insurance market was deregulated.
Deregulation also strips out a huge layer of consumer protection for all Floridians.
Because the average consumer does not have the resources or information to determine when a rate is excessive, the opportunity for the company to abuse consumers exists. However, the State of Florida has the time, knowledge, and resources to judge the fairness of rates contained in insurance policies. The state can provide a warranty of fairness to the insurance consumers of Florida.
Our View
The sponsors of this legislation mistakenly call this bill the “Consumer Choice” insurance bill. However, the only choice that consumers are given is between higher premiums (based on recent rate filing requests anywhere for 25% to 50%) or a move to Citizens’ property insurance.
However, this bill does not accomplish any improvement – instead it would significantly hurt Florida’s consumers. Deregulation of our property insurance industry rates would allow insurance companies to abuse consumers through excessive rate increases and would hurt Florida financially by overburdening Citizens. We also do not see any hard evidence this bill can achieve its stated goal of attracting new companies to the state.
We call on members of the Florida Legislature to vote against the proposed deregulation bill. If this legislation should pass, we urge Governor Crist to again veto this type of proposal. We encourage the legislature to choose what’s in the best interest of the citizens of Florida. [end release]