Insurance Crisis: More Brainstorming in Tallahassee

From today's Miami Herald, more ideas on how to lower insurance rates.

'A rate freeze for the state-run insurance pool, which is the largest home and condo insurer in Florida, is among the proposals in a 153-page bill that is being offered by the Senate's Banking and Insurance Committee.

Rates for Citizens Property Insurance would be frozen for one year at the Dec. 31, 2006, level and would require the insurer to set new actuarially sound rates for 2008. The bill also would eliminate a rate hike that already was approved for Jan. 1. Citizens would have to provide refunds to any policyholder who was charged the higher rates.'

Sounds great - so how are we going to pay for this? Ohhhh, I see...just gamble and hope that Citizen's never has to actually PAY on claims from a major catastrophe. But hey, at least everyone doesn't have to pay now, right? Sweet - I love short-term thinking politicians - they're the best, and here in Florida, we have the best, ever!

'Sam Miller from the Florida Insurance Council said by lowering premium rates, consumers could be facing higher costs after a major catastrophe if assessments are needed to make up a deficit in Citizens or the Florida Hurricane Catastrophe Fund, which sells reinsurance to insurers.

A proposal from the House Insurance committee is expected late Wednesday.

A major component of the Senate bill focuses on eliminating many of the onerous provisions of the insurance law that was passed in the final minutes of the 2006 legislative session last May.

One provision would be to remove the requirement that the state-run pool raise rates dramatically by March to increase its reserves so it would have the cash to pay future claims from storms.'

And more ideas that were passed around...

'• Citizens would be allowed to continue covering vacation and second homes as well as homes valued at more than $1 million.'

I particularly love that one - let's subsidize the insurance of vacation homes, because you know, THAT's the kind of business gov't should be in.

'• Citizens would be allowed to write multiperil policies throughout the state. Citizens officials have said previously that writing the extra policies would expand its premium base and spread risk. '

To be honest, I have no opinion one way or the other - though it sounds good in theory.

'• Insurers would be allowed to buy additional reinsurance from the Florida Hurricane Catastrophe Fund. This could be less expensive than buying in the private market. Insurers would be required to pass on any savings to policyholders. '

Again, this is a wonderful idea - lower the rates by subsidizing the private insurers. This is almost as genius as the original idea to create Citizen's. Now, instead of just allowing the IL to "cherry pick" the low-risk buyers, we'll now go ahead and remove all hurricane risk from the insurers and pass it on to the state. Brilliant!

'• The Panhandle's exemption from the statewide building code would be eliminated. Most experts believe stronger buildings would reduce insurance losses, and this is a move that many lawmakers and the insurance industry champion.'

Huh? Why was the panhandle ever exempted from building codes that the rest of the state had to follow? Ohhhh, that's right, it's FLORIDA politics at work here. Sorry, I forgot that reason and logic are not strong suits up in the halls of Tallahassee.

• The position of the state's insurance consumer advocate would be beefed up, moving it out of the Department of Financial Services and combining it with the Office of Public Counsel. The public counsel represents consumers in utility rate filings, something the current insurance advocate can't do for policyholders.

Why do I get the feeling that the Office of Public Counsel just got double the work with no corresponding increase in resources? Awwwwwwwesommmmme!

• Homeowners would be permitted to take on larger deductibles, buy less coverage than what would be needed to rebuild their homes after a major storm and even go without windstorm insurance if they've paid off their mortgages.

Another beauty! This way, Granny doesn't have to drive all the way over to the nearest bingo hall/indian casino for entertainment. She can just opt for the "minimum coverage" policy and get great excitement every hurricane season to see whether she loses everything (while the bank losses nothing) if her house gets hit! How is that NOT a cool way to go?

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