Insurers Fight Florida Ban on Cancelations and Rate Filings

Seen at Insurance Journal:

[Florida Emergency Rule] 690ER07-01, prohibits all insurance company rate increases, even if lawfully filed, and it retroactively prohibits insurers from canceling or non-renewing homeowner insurance policies.

Attorneys representing the insurers’ Florida Insurance Council has filed petitions for an expedited administrative determination with the state Division of Administrative Hearings and for judicial review by the First District Court of Appeal. They lawyers are also seeking an emergency motion for immediate relief pending a judicial review of the rule.

The text of 69OER7-01 can be found at the Florida OIR website. Distilled down, it says that there shall be no new rate hikes and no cancellations/nonrenewals (except for fraud or nonpayment) on residential property insurance until the insurer has made a filing reflecting the insurance reform provisions passed earlier this year, and incorporating analysis to be completed by the OIR.

While I am a capitalistic kind of guy who prefers as little regulation as possible…I’ve got to say that as far as emergency rules go, this one seems on the surface to be pretty reasonable. The lay of the land has changed pretty significantly, and therefore it makes sense that a regulator would want to see that an insurer has taken that change into consideration when reviewing filings.

However, on the flip side of that, it is understandable that the industry could be a bit uncomfortable with the conclusions that will be made by the OIR analysis, or how long it might take for that analysis to be completed given the cost and aggregation pressures they are experiencing.

Randy Diamond at the Palm Beach Post notes:

The insurance industry isn’t as unified at it might appear in the lawsuit filed Monday.[...]

But some companies were worried about what an angry Gov. Charlie Christ might do in retaliation. With the newly elected Crist riding high as the “people’s governor,” some company officials were questioning whether it would be wise to challenge him.

The court may strike down the emergency order, which was proposed by Crist, but would the governor take it sitting down?

Or would he convince the legislature when it meets again early next month for its regular session to enact ever more draconian measures against the industry?

Let’s also not forget that parts of the insurance industry has, shall we say, a certain knack for letting arrogance blind those parts to the potential unintended consequences in the political and public relations arenas.

While insurers are for the most part businesses who have a duty to their insureds and members/stockholders/investors to protect their bottom line, there are times that the benefits of being a wee bit generous far outweigh the price of defending the profit margin (or of trying to attain the hurdle rate) at all costs.

I suppose it’s too idealistic of me to suggest that a happy middle ground would be to see the emergency regulation loosened to allow for some rate revisions and exposure reductions if supported by analysis based on this January’s reform legislation.

Who knows. Perhaps the analysis included in new filings could provide a few shortcuts that might be welcomed in an OIR that is by some reports short-staffed.