Crist urges jilted homeowners to shop for insurer

TALLAHASSEE, Fla. – July 24, 2007 – Florida’s problems with property insurance won’t be going away anytime soon.

Gov. Charlie Crist said legislators will need to do more work to reduce property insurance rates and increase insurance availability to homeowners, beyond what they did during the special session in January, according to spokeswoman Erin Isaac.

The comments were in response to news that State Farm Florida Insurance Co. will drop 50,000 property insurance policies along the coast.

“He’s disappointed,” Isaac said.

The governor’s advice: Anyone being dropped should shop around, using the state’s new insurance Web site (www.shopandcomparerates.com), to find other insurers writing coverage in their area, she said.

At the same time Isaac was making her comments, a controversy was brewing in Tallahassee over whether insurers were passing along reduced rates to consumers as mandated by the legislature in January.

Insurance Commissioner Kevin McCarty said he planned to reject Florida Farm Bureau’s request to raise homeowner rates by a statewide average of 26.8 percent.

At least 11 other insurance groups also want to raise their rates.

During the special session, the legislature expanded a state fund that sells discounted reinsurance – insurance for insurance companies – with the mandate that insurers pass along the savings.

Florida Farm Bureau said in an initial filing in March that it would reduce rates by 24.9 percent but changed its position in a later filing. Last month’s filing stated that the company needed to buy additional reinsurance beyond the state fund from the private market to ensure that it would remain solvent in a mega hurricane – the type that occurs only once every 250 years.

McCarty said Friday in a statement that the insurer’s business decision to reinvest $6 million in added reinsurance did not conform to the new law.

“The intent of the law that came out of the January special legislative session was to give companies less expensive reinsurance from the state and to pass on that savings to their policyholders, and Florida Farm Bureau’s actions are clearly contrary to the intent of that law,” he said.

Florida Farm Bureau officials said after Hurricane Andrew in 1992 that the insurer had to be dissolved because it had inadequate reinsurance for the catastrophic event.

“Since then, FFB has consistently tried to purchase reinsurance to roughly a 1-in-250-year event,” company actuary Missy Shelly said in a statement. “Therefore, when the 2004 and 2005 storms hit, we were able to keep our promises to our members and remain solvent. Now, after over a decade, the OIR (Office of Insurance Regulation) suddenly calls this ‘excessive.’” William Stander, a regional vice president of the Property Casualty Insurers Association of America, said it was “pretty clear” that the governor was telling McCarty to send a message to insurers by rejecting rate hikes.

“Nowhere else in this country would a state department of insurance tell an insurance company to put its solvency at risk,” Stander said.

Michael Milnes, director of property casualty review for Office of Insurance Regulation, said it stood by its decision that the Florida Farm Bureau rate hike did not comply with state law.

Hearings for the other 11 insurers are scheduled for August and September.

Copyright © 2007 The Palm Beach Post, Fla., Distributed by McClatchy-Tribune Information Services.