Florida is experiencing artificially suppressed markets and insurance rates, which is not a long-term solution for the insurance problems the state is encountering, according to Kevin McCarty, insurance commissioner.
“Artificial suppression has adversely affected insurance consumers and policyholders in the past and would have a destructive impact on the availability of insurance in the long run,” McCarty said in a news release issued by the Office of Insurance.
He said the Office of Insurance supports any long-term solution enacted by the Florida Legislature that provides consumers with available and affordable insurance. McCarty said he has been working with the largest states in the nation, Florida’s policymakers, and members of Congress to gain support for a National Catastrophe Insurance Plan that would fund insurance before a disaster occurs rather than increasing the federal deficit after the catastrophe has occurred.
In the release, McCarty commented on a suggestion, made last week, that the Insurance Commissioner should be an elected official. He said, whether the Florida Insurance Commissioner is elected or appointed is a decision for the Florida Legislature and governor.
“However, it should be noted that Florida already has an elected official, Chief Financial Officer Tom Gallagher, who regulates insurance agents and agencies, insurance fraud, insurance company rehabilitation and liquidation, workers compensation and consumer services,” the release said. “In addition, Florida has an appointed insurance official, Commissioner Kevin McCarty, who regulates insurance company rates, insurance policy forms, financial oversight of companies, and market investigations. Florida policymakers created the appointed position to regulate insurance companies to remove politics from the position and to ensure the commissioner serves the needs of all Floridians – Democrat, Republican, and Independent voters.”
An active participant in the National Association of Insurance Commissioners, the Office of Insurance Regulation (Office)has witnessed the nation’s myriad of insurance regulatory models of both elected and appointed officers, each experiencing a variety of success.
In response to previous inquiries, McCarty explained the Office of Insurance does not have authority under Florida law to freeze or to call for a moratorium on rates, regardless of whether the commissioner is elected or appointed. By law, the Office of Insurance is charged with ensuring rates are not inadequate, excessive or unfairly discriminatory.
Many consumers have been concerned about not being able to afford rate increases; however, Florida’s law has no consumer affordability provision for the Office of Insurance to consider during rate reviews. The Office of Insurance welcomes any changes to Florida law that include viability factors that may be included during the rate review process.
Additionally, reports of inaccurate and possibly fraudulent claims during the 2004 and 2005 hurricane seasons are continuously reviewed and investigated by the Office of Insurance. Florida law prohibits insurance companies from basing rates on previous catastrophic losses and claims; therefore, catastrophic losses and claims from the 2004 and 2005 hurricane seasons cannot be used to project future losses or be contemplated in a rate filing.
“The Office of Insurance is confident analyses conducted result in approving of rates that meet the statutory standards outlined by the Florida Legislature,” the release concluded.
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