Consumer choice bill: good thing or not?
Here’s something all Floridians agree on: Our property insurance market is a mess. Figuring out what to do about the problem is where all bets are off. Newspapers across the state are covering the reintroduction of a bill by Senator Mike Bennett, R-Bradenton, and Rep. Bill Proctor, R-St. Augustine that was vetoed last year by Gov. Charlie Crist. The bill would allow insurers to charge rates they think are appropriate without approval of those rates by the Office of Insurance Regulation. A primary difference between this new bill and last year’s vetoed bill is that it would apply both to large private insurers and newer companies that operate in Florida. It would also require current policyholders of Citizens Property Insurance, the state-run company, to pay more – up to an additional 45 percent of their total premium if a major hurricane strikes and Citizens runs out of money to pay claims.
The Insurance Information Institute does not lobby, so advocating for or against any legislation is not something we do; however, a few rhetorical questions:
If insurers were making sufficient money in the Florida insurance market, why would many of them pull back or limit their business? Why can’t the new companies take all comers? How come homeowners have so few choices when buying property insurance protection?
Okay, here’s a question to answer: do other states have such challenges? No, other states aren’t nearly as messy. Many of our problems have everything to do with a state that is a major player in the insurance business – to the tune of having more than $400 billion in exposure as of June through Citizens, by far the largest of any state in the U.S. Remember, that Citizens is supposed to be the insurer of last resort, which it clearly is not. What a mess. Check our Florida Fact Book for more statistics on the Florida insurance marketplace, and here’s a perspective on restoring the market from James Madison Institute, a non-partisan policy center.