Charlie Crist flubs talking point on property insurance regulation

Published Oct. 27, 2014

Candidates in this year's gubernatorial race have launched so many attacks against each other, it's hard to keep them all straight. Even the candidates themselves seem to be having problems.

During the Oct. 21 CNN debate in Jacksonville, Democrat Charlie Crist seemed to mix his talking points when it came to insurance rates.

"We haven't had a hurricane in eight years and your property insurance rates have gone through the roof. Now why is that? I'll tell you why," he said. "It is because Rick Scott is not letting the department of insurance regulate insurance. He actually signed a bill last year that said that the Department of Insurance Regulation cannot regulate insurance."

Because we have a fairly long memory here at PolitiFact Florida, that didn't sound right to us. Crist's campaign told us they didn't want to expound on this any more, so we looked into it ourselves. We found that Crist is actually using two unrelated attacks at once here.

The first part of this claim notes that property insurance has gone up. This attack has been a linchpin in the Crist campaign, and we've rated it Mostly True in the past.

The reason has nothing to do with the state's Office of Insurance Regulation, though. It's because Scott signed SB 408, a 2011 law that allowed a reduction in overall coverage limits, shortened the window for filing sinkhole and storm-related damage claims, and limited claims for damage caused by sinkholes to primary structures, among other things.

The law made carriers file requests with the office for rate increases for higher reinsurance costs — effectively insurance bought by insurance companies — and capped those requests at 15 percent per year. The law also allowed insurers to pay back some claims at actual cash value — the cost of the insured dwelling minus depreciation — instead of replacement value, depending on the policy.

Scott's plan was to reduce the number of policies run by state-run insurer Citizens. The legislation reversed a Crist-era trend of more property owners depending on the agency.

The law did reduce coverage and raise rates, because its intent was for Citizens to become "actuarially sound." This was accomplished through "taking out" policies that were assumed by private companies and charging more in order to balance costs.

Now that the reinsurance market has stabilized after spiking following busy hurricane years in 2004 and 2005, Citizens and other companies this year have asked the state if it's all right to reduce their rates, but many people in Florida are still stuck with high insurance bills and are unable to afford coverage.

Now, to Crist's point about the state's Office of Insurance Regulation being unable to regulate insurance.

This goes back to May 2013, when Scott signed SB 1842. That indeed was a law that suspended Insurance Commissioner Kevin McCarty's power to regulate insurance for two years. But it was health insurance, not property insurance.

It was a response to the 2010 Affordable Care Act, which said state law had to follow minimum federal guidelines for insurance plans. The federal health law said insurance providers also had to justify unreasonable rate increases, defined as more than 10 percent per year.

The GOP-controlled Legislature was so opposed to the law that it said the federal government could regulate health insurance rates instead of the state. The law said insurers still file rate proposals to the Office of Insurance Regulation, but they didn't need the agency's approval.

The problem is, the law doesn't give Washington the power to regulate rate increases. Instead, it says the federal government will defer to state agencies. It even provided grant money to help states get up to snuff — Scott gave back $1 million the state received for this purpose.

The only time Washington gets involved is if a state's system doesn't meet federal standards to review rates, but Florida's did. That makes Florida the only state that has a qualified review system and doesn't regulate its own rates.

For 2015, 14 insurance companies filed plans for increases averaging 13.2 percent. Those numbers will likely go down before final rates are set, but the 2013 law prevents McCarty's agency from doing anything until next year.

To sum up: there are actually two bills involved here: One in 2011 concerning property insurance that effectively let rates go up while reducing coverage, and another in 2013 that prevents the state's regulatory agency from having a say in health insurance rates for two years.

Scott signed both those bills, but they are not interchangeable. Crist mixed his talking points here, but the result confuses the issues. We rate the statement False.

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