Florida Gov. Charlie Crist proposed an emergency rule Monday to guarantee insurers do not raise property insurance rates or cancel policies before a law he signed last week to lower rates goes into effect on June 1.
Crist will ask the Cabinet to approve the measure during its meeting Tuesday. It’s designed as a stopgap measure to prevent any filings for rate increases or cancelations within the next 60 to 90 days, which is when companies are expected to make their rate filings in accordance with the new law.
“The governor wanted to prevent companies from circumventing the intent of the law,” Crist’s spokeswoman Vivian Myrtetus said.
Under the bill passed by the Legislature during a special session, private insurance companies have access to more and cheaper reinsurance from the state. Private companies have less risk with the state providing more backup coverage in the case of a catastrophic hurricane.
The legislation forces companies to pass on to customers the savings they get because of the lower risk. There will be a 25 percent statewide average savings for customers in the private market outside of State Farm, the state’s second largest insurer, lawmakers said.
Customers of State Farm will get a statewide average decrease of 7 percent, lawmakers said.
Sam Miller, spokesman for the Florida Insurance Council, said insurance companies did not know Crist would sign the emergency rule.
“We didn’t know about it,” Miller said. “I can’t say we’re totally surprised. We’ll just have to look at it. Obviously it’s a pretty serious step the state’s taking.”
Miller also questioned the need for the rule because the Office of Insurance Regulation has the authority to turn down requests for rate increases.
Justin Glover, a State Farm spokesman, said the measure wouldn’t affect the company because it already received approval for an average statewide rate increase of 50 percent last fall.
Lawmakers went into special session after they were bombarded with complaints from residents who have seen their homeowners insurance costs soar since the destructive hurricane seasons of 2004 and 2005, which brought eight hurricanes to the state and cost $36 billion in damage.
Now, lawmakers have decided to lower rates, but with a cost. Should a catastrophic storm or season of storms hit the state, policyholders will be hit with assessments on their policies to help the state pay for the damage.
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