If you want lower homeowner’s insurance rates, you should call your legislators immediately and tell them not to give in to the greedy insurance companies just as our economy is coming back.
Many Floridians remember Hurricane Andrew, which hit in 1992 and devastated South Florida. People were living under blue tarps for many months. Then things were quiet until four named storms hit in 2004.
We were all learning about climate change. Reinsurers, who provide backup insurance mainly for hurricanes and earthquakes, suddenly learned about climate change and calculated the risk. Then they raised rates because Florida didn’t seem to be doing much about the problem and in fact, some actively denied that it existed.
That costs money!
After 2004, there was a great debate on how to proceed.
We had a Joint Underwriting Association (JUA) for those that couldn’t get insurance, but it did not have the necessary capacity. Private insurers, notably State Farm and Allstate, said they would have to drop all their policies and leave the state. They never did, but reacting to these threats the Legislature and Gov. Charlie Crist expanded the role of Citizens and the new Catastrophe Fund or Cat Fund to provide reinsurance at a discount to companies like State Farm and Allstate so they would stop that irritating whining.
Some special rules were set up. You could only get a Citizens policy if the only private policy available cost at least 15% more.
It worked! The reinsurance and the changes to Citizens had the effect of stabilizing the insurance market and everyone was happy for a time. Yay!
Citizens rates were mandated to be “actuarily sound” but were only allowed to go up 10% per year, cushioning the impact on ratepayers.
There was almost a decade without major storms, and Citizens built up a pile of money.
It is now in a situation where it is very unlikely that it would have to impose assessments on policyholders.
However, now there is another problem making State Farm and the others unhappy again. There are again rumors of leaving the state.
That would have sent cold chills up our spines, but everybody knows they won’t do it because there is just too much money in Florida.
But they are yelling and screaming just like they did back in 2004 and, of course, our Legislature wants to find some way to placate them.
Citizens, meanwhile, with some of the highest risk customers and limited rate increases, has consistently made money. This year they planned to ask for a 3.7% increase, but their board said that wasn’t close enough to the private companies, so they came back with a higher rate increase.
OIR rejected the proposal. That’s politics.
Citizens would probably be fine with no rate increase at all, but their Board said they had to raise rates anyway. Fine business logic.
In 2021, it is déjà vu all over again.
Insurance companies are still complaining, and the Legislature is bending over backward to try to please them at the expense of us, the consumers. Can we stop them? It is possible.
Call your legislators immediately and tell them not to give in to the greedy insurance companies just as our economy is coming back. Tell them you oppose Senate Bill 76 and House Bill 305. These bills would increase Citizens rates and forbid them from ever lowering rates. It is designed to allow private insurers to raise rates to much higher levels than they’ve currently proposed.
These bills also include a huge gift to insurers in the form of depreciating your roof if it is damaged.
Huh? Yeah, that’s right. It’s sneaky.
Although you need 100% of your roof 100% of the time, our Legislators think they can let your insurance company replace only a percentage of your roof based on age. You pay the rest.
In some cases, your roof isn’t worth anything, except to you and your family. But never mind, the insurance companies are crying so consumers can live without roofs.
Does it rain much where you live?
Bob Hunter is the Consumer Federation of Insurance Director of Insurance, Commissioner of Insurance, state of Texas, member of National Association of Insurance Commissioners and served on the NAIC Executive Committee and as NAIC vice-chair, Western Zone. In 2002, Hunter won the CFA Esther Peterson Consumer Service Award for lifetime service.
Bill Newton is deputy director of the Florida Consumer Action Network, NAIC Funded Consumer Advocate 2001-2004, Chair, CFA Insurance Sub-Committee. Newton has been working with FCAN since 1987.