INDIANAPOLIS (April 16, 2008) – The National Association of Mutual Insurance Companies (NAMIC) today said legislation going to the Florida House of Representatives would curtail competition and dissuade new insurers from entering the marketplace. Senate Bill 2860 was passed by the chamber on a vote of 32-7.
“This bill attempts to punish insurance companies with increased authority by the Office of Insurance Regulation at the expense of encouraging a competitive environment that would provide more choices for consumers,” said Liz Reynolds, NAMIC’s Southeast state affairs manager. “It also subjects insurers to Florida anti-trusts laws, setting up dual regulation.”
Reynolds said the legislation is largely the result of information gathered by the Select Committee on Property Insurance Accountability during “inquisition-like hearings held earlier this year. Several provisions in it could have a dangerous and chilling effect on the private market.”
Some other troubling provisions of the bill include a 10-fold increase in administrative fines against insurers for violating the Insurance Code, increased unfair trades practices fines, and allowing million-dollar homes to be covered by Citizens Property Insurance Corp.
During today’s Senate markup of the legislation, Republican Sen. Jeffrey Atwater praised a provision to allow Citizens a “glide path” to actuarially sound rates, with a “stairstep” approach to increasing rates over several years. “At the same time members of the Senate recognize the need for Citizens to become solvent through collection of actuarially sound rates, they are chilling the private marketplace with tighter regulation on the ratemaking process,” Reynolds said. “Don't consumers in the private market deserve the same ‘glide path’ to reach solvency for their chosen insurer instead of obstacles to providing appropriate coverage at appropriate rates?”
Reynolds also rebuffed comments by several senators who charged insurance companies with ignoring their responsibilities and neglecting their customers. “What about the responsibility of remaining solvent?” she asked. “Companies have made good on their promises to pay claims, and they want to continue to be able to do so.”
Another troubling part of the bill requires that insurers use only approved catastrophe models in rate filings. “This continues the fallacy that the insurance industry is a monolith, that all companies do and should behave the same way,” Reynolds said. “The industry is composed of a great variety of companies, and they should be allowed to compete using the best resources and information a company believes is available. Let consumers decide if a company does a good job of that.”
Reynolds said NAMIC will continue to work with the Florida Insurance Council and other supporters of the private insurance marketplace as the legislation moves to the House.
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