My goodness, Monday would have been a wonderful day to be a nattering nabob, if only I hadn’t been distracted with issues arising from real work.
Seen in the Miami Herald:
Who told us that we were going to see 20 percent rate reductions? It was the OIR [Office of Insurance Regulation], which hired Robert Hunter [insurance director for the Consumer Federation of America and former Texas Insurance Commissioner] for pretty big money to do an analysis of what we could anticipate.
My question is—and I’m going to bring this up to the [Florida] Cabinet—we heard 20 percent and we got 10 percent. What happened?
We took on an enormous amount of extra risk (in the CAT Fund) because we all agreed our policyholders were hurting, our economy was hurting and we needed rate relief.
We should always go back and find out whether it was a miscalculation, bad information or whether in fact the insurance companies aren’t doing what they were supposed to be doing.
But think about this: State Farm was out there from the get-go, saying “our rates could come down between 8 percent and 10 percent.”
Citizens wasn’t [directly] impacted by the CAT Fund changes, but it was out there saying “our rates might come down about 10 percent.”
So, between State Farm and Citizens, that’s 50 percent of the market.
How do you get 20 percent if 50 percent of the market is saying they are only going to [drop] rates about 10 percent?
That was Florida CFO Alex Sink, responding to a Herald interviewer’s question on why Florida Homeowners rates haven’t come down the 20% promised to regulators.
I shall now refrain from making snarky observations of how other regulators have (ahem) incented insurers to lower rates in product lines of political interest.