Florida Flex Rating Bill Passes House Subcommittee

April 14, 2003

The Florida House Subcommittee on Insurance Regulation has approved a bill that would establish a flex rating system for homeowners, commercial property, and auto insurance policies.

“This measure is a good first step toward strong regulatory modernization in Florida,” said James S. Taylor, southeastern regional manager for the National Association of Independent Insurers (NAII).

“It will increase competition while still allowing the Department of Insurance to have appropriate regulatory authority.”

Proposed Committee Bill IN 03-03 would allow homeowners insurers to increase or decrease rates by 10 percent or less on a statewide basis, and no more than 25 percent on an individual policyholder basis without approval by state regulators.

Insurers could use the option for motor vehicle insurance if statewide average rate increases or decreases were 15 or less, and policyholder increases were no more than 40 percent.

Although the bill includes significant restrictions on arbitration – eliminating the process for residential insurance in filings with an overall statewide increase of more than 20 percent, or filings resulting in premium increases of more than 40 percent – the restrictions are offset by the more streamlined rating procedure, Taylor added.

“This bill will make the rate review process much easier for both insurers and the DOI, which compensates for the ability to arbitrate,” he said.

The bill, which is expected to be sponsored by Sen. J.D. Alexander (R-Winter Haven), now goes to the full House Insurance Committee for review.

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