Is the Florida legislature doing anything to resolve the current insurance crisis?
In June 2009, Florida Governor Charlie Crist vetoed the Consumer Choice Act, which would have allowed private insurers to establish rates independent of the Office of Insurance Regulation (OIR). In his veto message, Crist reasoned that the bill would allow larger, private insurers to “cherry pick,” or sell only to profitable policy holders, while forcing smaller, less capitalized companies and state-run insurer Citizens Property Insurance to underwrite riskier policies. This was and is an important issue in the sinkhole claim arena, especially in counties like Pasco, Pinellas, and Marion, where sinkhole activity is common.
On December 9, 2009, Sen. Bennett and Rep. Proctor introduced the 2010 Consumer Choice Act, which includes changes to the previously vetoed act. The provisions of the proposed legislation are as follows:
- Allows private insurers to use rates different from rates otherwise set by the OIR. This provision, however, does not apply to policies that are subject to consent decrees or other agreements. For instance, the legislation would likely prohibit State Farm from obtaining increased rates for those policies affected by its consent agreement with the OIR allowing for a flat rate increase of 14.8%.
- Addresses deficits incurred by Citizens Corporation and requires the imposition of uniform policyholder surcharges of up to 15 percent of policy premiums to curb yearly deficits, before emergency surcharges are assessed.
- Requires Citizens to obtain a signed acknowledgment of surcharge and assessment liability from insureds who obtain or renew their policies.
Supporters of the legislation believe that these changes adequately address past concerns and will allow all private homeowners’ insurers to offer a policy at a rate that the provider believes will adequately protect the consumer.
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