Florida State Wants Deeper Insurance Rate Cuts

BRADENTON, Fla. – Aug. 16, 2007 – The state has been busy turning down rate increases requested by insurance companies, but now even rate decreases are being rejected as not creating enough relief for consumers.Recently, three property insurance carriers proposed lowering their rates. But the Florida Office of Insurance Regulation on Tuesday said the reductions aren’t good enough.“Governor Crist and the Legislature made some courageous decisions during the January special session,” Florida Insurance Commissioner Kevin McCarty said Tuesday in an issued statement, referring to legislation that ordered insurance carriers to lower rates. “We will not allow companies to file incomplete or inadequate rate reductions affecting the policyholders of this state.”The companies denied rate requests were Cypress Property & Casualty, which proposed a 5.4 percent decrease in rates; First Floridian Auto and Home, which proposed lowering rates by 8.3 percent; and Travelers Indemnity Company of America, which also proposed an 8.3 percent average rate cut.Companies have until Sept. 30 to submit their final reduced rate filings mandated by the law.Florida Farm Bureau was recently denied a 26 percent rate increase by the Office of Insurance Regulation.But denying decreases is a switch.However, it doesn’t surprise state Rep. Ron Reagan, R-Bradenton.“It doesn’t surprise me that they’re (Office of Insurance Regulation) wanting more,” Reagan said. “I see the governor trying to hold their feet to the fire and get lower premiums.”Tom Zutell, a spokesman for the Office of Insurance Regulation, said the companies’ rates were denied after review from the regulatory agency’s actuaries.Under the new law, companies have access to cheaper reinsurance – or insurance for insurance companies – through the Florida Hurricane Catastrophic Fund. In turn, companies are supposed to pass reinsurance savings on to consumers.“On these three particular ones,” Zutell said, “the actuary said that it appears from their reinsurance contracts that they realized a lot more savings in reinsurance than they passed on to the consumer.”Immediately after the special session in January, lawmakers said consumers could anticipate as much as 24 percent savings on homeowners insurance premiums. The recent rates that have been proposed from various companies awaiting public hearings have been more in the range of 12 percent to 15 percent, Zutell said.Hollywood-based Coral Insurance recently filed for a 9.7 percent rate decrease after taking advantage of cheaper reinsurance from the state CAT fund. The company operates in 12 counties, mostly in the southern part of the state.State Rep. Bill Galvano, R-Bradenton, said the denial of the rate requests was a sign McCarty was getting tough on insurers.“I believe that’s absolutely the way he has to be now,” Galvano said. “What we believed during the session and what the reality is now has not matched. Until the Office of Insurance Regulation holds the insurance industry’s feet to the fire with regard to passing on the savings to consumers, it’s not going to happen.”Copyright © 2007 The Bradenton Herald, Fla., Brian Neill. The Associated Press contributed to this report. Distributed by McClatchy-Tribune Information Services.