Consumer Advocates Urge Governor Crist
To Veto HB 1171

~ Bill allows biggest insurance companies to raise rates unchecked ~

May 27, 2009

TALLAHASSEE -The Consumer Federation of the Southeast and Florida Public Interest Research Group (PIRG) today warned that the Residential Property Insurance bill (HB 1171), would create the same dangerous deregulated environment that led to the collapse of the nation's financial markets by allowing the largest insurance companies to raise rates without State approval.

If it becomes law, this bill would allow major property insurance carriers to raise rates unchecked and game the marketplace to push the highest-risk customers onto Citizens Corp., (the state's insurer of last resort), and onto smaller Florida-based companies that are not allowed to charge the same rates.

"This amounts to another bailout - this time for major insurance companies as they attempt to cherry pick the market by pricing their way out of the areas they don't want to serve," said Walter Dartland, executive director, Consumer Federation of the Southeast. "We need to create an equitable competitive process with consumer choice in mind, instead of continuing to put the interests of big companies first."

In fact, if HB 1171 becomes law, major insurance carriers would be able to manipulate rates, quoting excessive premiums to coastal homeowners, then dropping those policies if they choose to so they can maintain and grow inland policies where there is less exposure. Ironically, the smaller, Florida-based companies that can't raise their rates under this law would be left to bear the highest risks.

"Florida is in the midst of an economic crisis and our residents cannot afford to be caught in a volatile insurance market faced with erratic rate increases," said Brad Ashwell, legislative advocate, Florida PIRG. "Governor Crist has always been an advocate for the people of Florida -- we need him now more than ever and urge him to veto this anti-consumer measure."

Alarming impacts of HB 1171 include the following:

• Allows major carriers to raise rates in Florida without any guarantee that they will continue writing policies in Florida. State Farm currently has a petition pending before the Office of Insurance Regulation (OIR) to withdraw from the Florida market.
• Suspends efforts to create a competitive marketplace in Florida by treating larger carriers more favorably than Florida-based insurance companies, ultimately harming consumers and businesses.
• Reverses the intent of HB 1A - passed in 2007 - to lower property insurance rates statewide. HB 1171 will permit a few select companies to charge rates higher than what is currently approved by OIR.
• Allows larger insurers an unfair competitive advantage by allowing them to raise their rates, instead of helping smaller Florida-based carriers to grow their surplus and pay claims after a hurricane.

Florida has supported the growth of Florida-based carriers to reduce the state's dependence on the few large national carriers who have consistently reduced the writing of Florida policies since Hurricane Andrew hit the state in 1992. This bill would leave these carriers at a competitive disadvantage, hurt their financial stability and ultimately hurt all Florida policyholders.

Consumer advocates are urging concerned citizens to call the Governor's Office of Citizen Services at (850) 488-4441 or email the Governor at Charlie.Crist@MyFlorida.com asking to protect consumers by vetoing HB 1171.

The Consumer Federation of the Southeast (CFSE) is a not-for-profit consumer advocacy group founded in 2003 and dedicated to consumer advocacy in the Southeastern United States. Our goal is to establish a vigorous, new, pro-consumer agenda built upon public awareness, consumer education, and coalition-building. For more information visit http://www.consumerfederationse.com.

Florida PIRG takes on powerful interests on behalf of Florida's citizens, working to win concrete results for our health and our well-being. With a strong network of researchers, advocates, organizers and students across the state, we stand up to powerful special interests on issues to stop identity theft, fight political corruption, provide safe and affordable prescription drugs, and strengthen voting rights.