TALLAHASSEE — Lawmakers are again pushing to deregulate the state's property insurance market, a move that could increase rates for most policyholders.
Rep. Bill Proctor, R-St. Augustine, and Sen. Mike Bennett, R-Bradenton, filed legislation Tuesday to limit the state's authority to control private property insurance rates, saying the marketplace will balance itself.
"This bill's foremost purpose," Proctor said at a news conference, "is to revitalize the private insurance market in the state of Florida, which we know is eroding."
It's part of a broader effort to "level the playing field" for private insurers that compete against government-subsidized Citizens Property Insurance Co., the state's largest insurer.
Under the current system, private property insurers must get approval for rate increases from the Florida Office of Insurance Regulation. But regulators have consistently trimmed their requests and private companies argue the state is not realistic about what they need to charge to remain viable in a hurricane-prone area.
The issue came to a head earlier this year when State Farm announced its intent to stop writing policies in Florida after the state refused a massive rate increase. A similar deregulation bill aimed at keeping the company passed the House and Senate in the spring legislative session, but Gov. Charlie Crist vetoed the measure because he said new companies would fill the hole.
The new legislation would allow all companies — not just large ones like State Farm, as in the previous bill — to set a tier of unregulated rates. Bennett said the goal is to allow consumers to choose the best company.
"Anybody should be able to shop the rates and decide for themselves what they want," Bennett said, with a number of lawmakers at his side.
The Office of Insurance Regulation had no comment on the bill, HB 447, but released a statement saying, "Commissioner (Kevin) McCarty will not support any bill that will allow excessive rates to be charged to Florida policyholders."
Bennett, a Citizens foe, wants to get the state completely out of the insurance market in five to 10 years if he can't get Citizens to issue actuarially sound rates. Unlike private insurers, Citizens' rates are held artificially low by state law. Bennett plans to file legislation to abolish Citizens if it doesn't establish rates that are competitive with private insurers.
In the deregulation bill, he added a provision to ensure Citizens policyholders carry the burden if a major hurricane hits and the state doesn't have enough money to cover claims. Anyone getting a Citizens policy would be required to sign a waiver stating they understand they would face a 15 percent surcharge on each policy if Citizens needs money. And if the surcharge is implemented after a major hurricane, Citizens policies would get assessed before private insurance policies. State law currently states that Citizens can level an assessment on all policies in the state, including private ones, if it needs money for claims.
Both ending government-run property insurance and allowing private companies to set their own rates would lead to large rate increases and possibly some policy cancellations. But Bennett assured those concerned that the marketplace would keep prices in check.
"By opening up the market, you'll get more competition in the state," he said.
John Frank can be reached at email@example.com or (850) 224-7263.