Florida home insurers, politicians at odds over rate filings

About seven months ago, Gov. Charlie Crist signed legislation he said would lower property insurance premiums.

It hasn’t quite turned out that way.

State officials had promised rates would drop about 25 percent on average because the new law allows insurers to get cheaper state-backed reinsurance. The law required insurers to pass on those savings to customers.

But as of early August, the average final rate filing under the new law had been for an increase of just over 30 percent, officials said.

State Farm, the second largest home insurer in the state, proposed to drop rates by about 7 percent on average. But state regulators told the company to try again. Insurance Commissioner Kevin McCarty said the company’s decrease should be closer to 11 percent.

No increase has been approved yet and McCarty suggested many may not be. “We fully expect the companies to provide the rate relief anticipated by the Legislature,” McCarty said.

Those savings were also anticipated by homeowners — many of whom say they are yet to see any help. A recent survey found about half those polled expected bigger savings.

McCarty, Crist and other officials say some insurance companies are not doing what they were required to by the law.

Insurers say they must have cash on hand to pay out claims from big storms. They argue they never guaranteed the savings state officials promised and tried to tone down expectations.

“Most insurers made no specific promises,” said Sam Miller, a spokesman for the Florida Insurance Council, which represents insurers. “In fact, insurers repeatedly sounded a note of caution about the real world impact of the law on policyholder premiums, so as not to raise unrealistic expectations.”

State Farm officials said during legislative debate in January that it would likely file for a decrease of about 7 percent. It recently asked for a 7.1 percent drop. “We promised and we delivered, so there’s no game going on here,” said Mark Delegal, a lobbyist for the insurer.

Ultimately, insurers say they must charge what they think they would need for claims if Florida has another run like 2004 and 2005 when they paid out nearly $40 billion for hurricane damage.

McCarty accused some companies of using savings from buying cheaper state-backed reinsurance to either pad their shareholders’ bottom line or buy additional private reinsurance. That may be illegal, he said.

Crist blamed the insurers and vowed to keep fighting to bring rates down. “I’m going to continue to do everything I can to push this industry into a direction of treating consumers fairly in the state of Florida,” Crist said. “And right now, there are exceptions, but right now, they’re not treating our citizens fairly. They’re too greedy.”

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Topics Florida Carriers Legislation Homeowners