So, it seems that the Florida Senate Select Committee on Property Insurance Accountability has, in spite of the time and ink wasted repeating that mouthful of a committee name, come up with a few ideas on further property insurance reform in the wake of their hearings this winter. According to Insurance Journal, those suggestions include:
- Extend temporary prohibition on insurers making “use and file” rate filing.
- Require rates be based on hurricane loss models approved by Commission on Hurricane Loss Projection Methodology
- Require that approved models be used by an insurer in determining its probable maximum loss
- Require or authorize the Florida Office of Insurance Regulation (through the Financial Services Commission) to adopt rules establishing standards for allowable profit and contingency factors in rate filings
- Prohibit rates from including reinsurance costs that duplicate coverage provided by the Florida Hurricane catastrophe Fund, regardless of the effective date of coverage
- Provide criminal penalties for insurance officials who knowingly, with intent to deceive, make false statements or reports to the OIR
- Require insurers to certify in a rate filing the number of policies they intend to non-renew and to calculate the reduced risk into their rates
I suppose that no one on the committee noticed that limited long-term profitability concerns…as well as the sheer amount of paperwork (or the its electronic equivalent) is in no small part what makes the state such an unattractive market to insurers?
It’s a shame that “profit” has become such a dirty word (in a Republican-run state, even!). Excess profits are a good thing in a free market—if they existed, they would attract additional lower-priced competitors to the marketplace, who would presumably be happier with not-so-excess profit.
You almost wonder if such anti-capitalistic policies define the property insurance path the state wants to follow, perhaps they should simply move to a state-run monopolistic insurer. I know a few entities who would be willing to help administer such a beast…for a fee, anyway… if the state’s citizens are willing to foot the bill when the next big storm comes.
• Strengthen the excess profits law