You are here:HomeNews CenterInsurance News2009Florida Gov. Crist Quietly Signs Bill to Allow State-Run Insurer to Increase Rates

Florida Gov. Crist Quietly Signs Bill to Allow State-Run Insurer to Increase Rates

Florida Gov. Charlie Crist (R) has signed legislation to allow the state-run insurer, Citizens Property Insurance Corp., to increase rates up to 10% per policy...
June 2, 2009

Florida Gov. Charlie Crist (R) has signed legislation to allow the state-run insurer, Citizens Property Insurance Corp., to increase rates up to 10% per policy per year beginning in 2010, until it reaches an actuarially sound level. The measure provides Citizens with a "glide path" to actuarially sound rates - something the state-run insurer has not had since laws were enacted several years ago to keep rates frozen. It also dismantles many of the changes Crist pushed through the legislature in 2007. Crist signed the bill without making any comment.

In 2007, a state law expanded the state's catastrophe fund, froze rate increases and required insurers to reduce rates by as much as 53%, under the terms of what Insurance Commissioner Kevin McCarty said at the time were "presumed factors of savings." The mandated 2007 rollbacks in property insurance rates were greater in high-risk coastal areas and smaller in lower-risk inland areas, prompting the the National Association of Mutual Insurance Companies to comment that it "seems to fly in the face of actuarially sound rate making." The 2007 freeze and rollbacks came shortly after Florida hired as its actuary to set rates J. Robert Hunter, perennial industry critic and insurance director of the Consumer Federation of America.

Meanwhile, officials overseeing Florida's Hurricane Catastrophe Fund say that while the fund will be capable of covering damage from a major hurricane, it would take significant premium increases to replenish the fund afterward. Officials say premiums in Florida are artificially low, which necessitates borrowing to cover major storms, leaving less money for the next hurricane. The state's fund can currently cover about $22.8 billion in claims, they say, although about half of the money would be borrowed.

At a Florida Cabinet meeting in 2007, Crist remarked of the insurance industry, "I don't think we can trust this industry. I think I've been pretty clear about that. I don't, and I don't think the people do either.

Crist Quietly Signs Bill (Palm Beach Post 5/29/09)

Fla. Mandates Property Discounts Up to 53% (PIA 3/5/2007)

Floridians Will Pay More If Big Storm Hits (Tampa Tribune 5/29/09)

 

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