Insurance Associations Weigh-in on Fla. Legislation

May 7, 2007

The good news of the 2007 Florida regular legislative session, according to the Property Casualty Insurers Association of America is that consumers may save money on their automobile insurance due to the scheduled sunset of the no-fault insurance system and legislation was passed that will help encourage residents to storm proof their homes.

The bad news says PCI is that on property insurance issues, the governor and Legislature continue to go down a dangerous path that could be very costly for all residents of the state.

Despite many reforms to the no-fault insurance system over the years, persistent problems with personal injury protection claims fraud and abuse have forced consumers to pay more for insurance than they should, according to PCI.

“We applaud House Speaker Marco Rubio for holding firm to his commitment of implementing no-fault reforms that would significantly reduce the fraud and abuse that is rampant in the system or let the law sunset,” said William Stander, assistant vice president and regional manager for PCI. “PCI entered the session urging lawmakers to simply let the no-fault law sunset.”

PCI’s Stander said the sunset of no-fault will reduce rates and consumers could save an average of $250 or more per year, leaving consumers with more dollars in their pockets, while providing more options regarding how they spend their insurance dollar and greater ability to purchase the insurance products that best fit their individual circumstances.

PCI also praised the enhancement of the My Safe Florida Home Program.

“This type of legislation typifies the long-term approach that all Floridians can support,” Stander said. “Fortifying homes, from future storm damage can help to save lives and reduce property damage. In the long run these efforts help to reduce insurance costs and help ease the state’s insurance crisis.”

Cecil Pearce, American Insurance Association Southeast Region vice president, said, “The regular legislative session picked up where the special session left off – with a debate over the degree to which Florida will continue to overburden insurers with regulatory mandates that discourage the private market, while at the same time shifting more of the state’s hurricane risk to Florida taxpayers and businesses.”

The AIA VP added that legislators backed several provisions aimed at softening the blow of the operational mandates already in place – such as limiting a 90-day ‘pay or deny’ provision primarily to only residential property insurance claims, and removing a requirement that private insurers adjust Citizens wind claims.

The MSFH mitigation program offers eligible homeowners a free home inspection and the opportunity to apply for grant money to make recommended improvements. The legislation that passed will allow the program to serve more Floridians and to boost efforts to educate homeowners about the importance of mitigation, Stander added.

Fearing what he called an “inevitable financial calamity if Florida is hit by a major hurricane,” Stander said SB 2498 puts all Floridians at risk by paying relatively small premiums now in exchange for paying much more in the future: “There are serious consequences to this quick-fix approach to the state’s property insurance crisis,” he said.

PCI is worried that as Citizens Property Insurance Corp. becomes larger and more diversified “at rates that bear no relation to the risk,” the greater the financial crisis that could occur when a major storm hits.

“During the debate on issues related to property insurance, 37 House members courageously took a stand and voted to make Citizens self-supporting,” Stander said. “Senate Bill 2498 will make it easier for Citizens to compete with the private market by allowing consumers to be covered if a private insurer is more than 15 percent higher than comparable coverage from Citizens.”

The bill also prohibits insurers from establishing new wholly owned subsidiaries that operate only in Florida, according to Stander.

Sources: Property Casualty Insurers Association of America
American Insurance Association

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