The free market could cost insurance customers millions of dollars this legislative session.
The private insurance industry says it's time to make government-run Citizens Property Insurance the insurer of last resort again by raising rates on many of its 1.2 million customers and reducing coverage.
They say they can't compete with Citizens' low prices. And state lawmakers are listening.
In fact, insurers and other businesses are riding a wave of deregulation fever and capitalist ideology espoused by Gov. Rick Scott and embraced by a Republican Legislature determined to live up to its conservative roots.
Just consider the rhetoric unleashed last month before a Senate banking and insurance committee passed a massive reform bill that frees private insurers from having to offer comprehensive sinkhole coverage.
"We've been monkeying around socializing insurance for the last number of years and it's done nothing but make the problem worse," said Sen. J.D. Alexander, R-Lake Wales, before he cast his vote in favor of the bill. "That's why communism collapsed and capitalism works. Free markets work."
In the interest of allowing the private sector to attract and compete for hundreds of thousands of Citizens policy holders, changes are coming not only with increased premiums, but also reductions in benefits and more stringent eligibility requirements.
Many of the changes likely to occur will roll back laws passed under former Gov. Charlie Crist to make Citizens more accessible. Among them: a 10 percent annual cap on premium increases.
Citizens officials contend rates are too low to cover potential losses of a hurricane on the scale of 1992's Hurricane Andrew. In that case, taxpayers would have to pick up the tab.
Some studies show Citizens' rates need to rise as much as 55 percent. That means policyholders who pay $2,000 for Citizens coverage would see bills climb to $3,100.
Eligibility requirements also could be changed to only allow people to enter the program if the only policies they can find cost 25 percent more than Citizens. Now consumers can go to Citizens if their only options cost at least 15 percent more.
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Thousands of property owners with sinkhole coverage are also likely to see major changes.
A massive property insurance bill is making its way through the Legislature, with lawmakers rejecting compromise with opponents and limiting testimony from policy holders.
The guts of the proposal, which among other things would change the way insurers pay property losses and set a statute of limitations for filing hurricane claims, were passed last year by the Legislature and vetoed by Crist.
In the 2011 environment, it's a likely go.
Added to the bill: a controversial provision that would require companies to pay for sinkhole damage only in cases of total ground collapse. That represents about 1 percent of the nearly 9,000 sinkhole claims paid out in Florida last year.
Insurance companies say it's necessary because a ramp-up in sinkhole claims is costing the industry hundreds of millions of dollars every year.
And, they argue, they often end up paying tens of thousands of dollars for hairline cracks allegedly caused by sinkholes. Claimants, they say, pocket the money without making repairs.
While even consumer advocates agree current law opens the door for frivolous claims and fraud, there has been no interest in a coverage compromise that falls somewhere between a hairline crack and total collapse.
With limited sinkhole coverage available and mortgage companies in some cases requiring such policies, homeowners will have to rely on their banks for coverage, which could cost three times as much as currently available policies.
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Fraud is also at the heart of arguments made by automobile insurers for changes to personal injury protection.
The so-called "no fault" law requires drivers to carry $10,000 worth of insurance so accident injuries are covered no matter who causes the accident.
The requirement, insurers say, has led to rampant fraud.
According to the National Insurance Crime Bureau, Florida is No. 1 in the country for automobile accidents staged with the goal of cashing in on insurance policies. Tampa and Miami are among the top cities in the country. There's no solid data to back up that claim, because fraud is difficult and expensive to prove.
But a cottage industry of trial lawyers and health care clinics have popped up throughout the state to collect on the policies, with advertisements reminding accident victims that they are "entitled" to $10,000 from their insurance companies for injuries and damages.
To ferret out fraud, insurers want the right to question policyholders under oath during claims investigations; the ability to conduct independent medical examinations to determine the extent of injuries and assess prescribed treatment; and a cap on trial lawyers' fees in PIP cases.
More broadly, there's a move afoot to change the state's "bad faith" insurance laws to stop what insurers call "lawsuit abuse." Under current law, policy holders can sue an insurance company based on the way it handled a claim and seek recoveries above the limits of the insurance policy.
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Consumer advocates argue many of the changes to insurance regulation barreling through this year are all about a desire to get insurers off the hook for payouts so they can maximize profits.
Indeed, despite the hand-wringing about fraud and competition with Citizens, the insurance industry is healthy.
In 2009, the property/casualty insurance industry reported a 4.7 rate of return, up from 0.1 percent in 2008.
But that's no cause for alarm, according to Sen. Ellyn Bogdanoff, R-Fort Lauderdale, who sits on the Senate insurance and banking committee. She said many people think of insurance companies as the "Darth Vader of corporate America."
"A lot of people think they don't have a right to make a profit, but they do," she said.
Others see it differently.
Rep. Evan Jenne, D-Fort Lauderdale, sits on the House banking and insurance committee and worries about releasing the insurance industry to market forces.
"What it's about this year is turning the reins of government over to big business," Jenne said. "I don't think people really understand what complete deregulation or massive deregulation will do to them as consumers. They'll pay less to their government at the end of the day, but they'll be paying even more to the insurance companies."
Janet Zink can be reached at firstname.lastname@example.org or (850) 224-7263.