Policyholder Call to Action on Florida Senate Bill 408
In less than a week, the Senate Banking and Insurance committee will vote on SB 408. If the session doesn’t start until March, what type of “vote” is taking place? Although the 2011 Session of the Florida Legislature does not begin until March 8, 2011, various committees of the House and Senate meet throughout the year. For a bill to become law, it must be voted on by the full legislature (usually during Session). However, before the full legislature can vote on a bill, if must be “heard in committee.” Thus, a bill must be heard by multiple committees in both the Senate and House. Then, the full Senate and House will vote on a bill before it can go to the governor for signature.
I offer this background information because it puts the disconnect between Tallahassee and the rest of the state in context, especially with respect to insurance issues. Tallahassee is a bubble that magnifies the political consequences of policy choices while minimizing the impact these choices will have on the consumer. Take the debate surrounding the potential deregulation of Florida’s insurance market. If you operated in “Tallahassee world,” you would think that this was the silver bullet that would fix all of the insurance ills that plague the Florida property market. Democrats and Republicans fell over themselves in a rush to vote for this bill last session. In the Florida House of Representatives, 105 voted yea, 13 voted nay; in the Florida Senate, 27 voted yea, 9 voted nay. To this day, I am amazed that only 22 members of the Florida legislature voted against deregulating Florida’s insurance market. I am even more amazed that this legislation is GOING to pass this year because Gov. Scott would probably sign such a bill (unlike Gov. Crist who vetoed the bill).
As this bill was debated, you could not find many people in Tallahassee, other than consumer groups, who opposed this bill. The people who opposed the bill did so at their own peril. Insurance Commissioner Kevin McCarty opposed the bill and, as a result, earned the ire of several State Senators who wondered if it was “time for a change at OIR.” When I testified against this bill in the Senate and House, the members questioned my motives about testifying against a bill that “allowed consumers to choose.” However, throughout the state, most editorial boards and newspapers took positions against this bill. They were able to see that this bill would lead directly to higher rates and that the “market” would not increase competitions and attract capital to Florida. My office received lots of communication from consumers who understood the dangerous ramifications of this bill.
Given the statewide apprehension about this bill and the documented failures of deregulation in similar circumstances, why did only 22 members of the legislature vote against the bill? It is because the industry is able to frame the insurance discussion in Tallahassee. That discussion revolves about “getting more companies to come to Florida” and “decreasing the cost drivers in the system.”
- “Getting more companies to come to Florida” = deregulate the market so that companies can charge whatever rate the market will bear.
- “Decreasing the cost drivers in the system” = losing resources that protect consumers from unscrupulous insurers: making it harder to file a claim, imposing time limitations on claims, and decreasing the role of plaintiff attorneys in the claims process (i.e., SB 408).
When the issue is framed in this way, it distorts the true nature of the problems in Florida.
I believe that consumers understand the need to improve the insurance climate here in Florida; I also believe that the bad actors in the process should be punished. It is possible to approach the insurance issues in our state in a way that could benefit the industry and public at the same time. However, this legislature does not want to approach the problem in a balanced manner. Their industry-driven approach to the insurance problem is to deregulate rates and then make it harder to file a claim. If they pass those changes, I can bet that when the next natural disaster strikes and people are unpleasantly surprised at the changes imposed by SB 408, the legislature will be back in Tallahassee addressing these same issues. Moreover, when rates skyrocket because of deregulation and the “market” does not lead to increased competition and lower rates, the Tallahassee disconnect will come back to bite those who voted for deregulation.
The only way to stop the “Tallahassee disconnect” is to get involved in the process and let our elected officials know that we will not tolerate one-sided legislation that helps the industry -- at the direct expense of the consumer.
One issue that appears to be coming from this legislation is to go back to the payment the acv of a claim vs. paying the replacement cost up front on Hurricane and Fire claims. The legislature forgets that the reason they passed the legislation to pay the replacement cost up front was due to the enormous number of complaints from constituents after the 2004 Hurricanes. The way things are shaping up, we may have to wait for another Hurricane season like that to generate the same complaints from the policy holders again to get the attention of these legislatures.
These are great points. The insurance consumer in Florida is generally as unaware of pending insurance legislation that will not only hurt their financial stability with higher rates, but also their ability to recover from a hurricane, fire, sinkhole or other insured loss because coverages are being hacked away at.
The fact is, when the law of unintended consequences takes hold, it will only be AFTER people are hurt that the legislators will get around to correcting these mistakes.
By then, it will be too late.
I encourage every consumer advocate to have the policy holders they represent, share this article and encourage them to contact their representatives in the house and senate, and tell them that this bill is NOT good for Floridians.
FLORIDIANS CAN'T AFFORD SB 408
Thanks Nancy. You and Mike are both right...sadly.
As the bill stands, there's going to be a huge problem in Pasco and Hernando counties. The bill was amended last week to say that insurance companies "may" include sinkhole coverage. They would still have to cover catastrophic collapse, but that's just a few of the cases.
Banks will still require sinkhole coverage so what are homeowners going to do when their insurer stops issuing the coverage? Go into Citizens? Default? That would be a worse mess than we have.
Perhaps the banks can step up and tell the Legislature that S 408 is a bad idea. If they don't, and this passes, we'll have a new wave of foreclosures in the sinkhole counties as people are forced to default because of impossibly expensive insurance premiums.
And the Legislature says it is "solving" a problem?
Thank you for your informative review-it reflects my own astonishment that Insurance and those who represent Insurance could be so limited in perspective as to think this will even work. I needed to re-build our house to make it H/c accessible (2004-2005) and at the same time make additions which would render the house storm resistant and had already done so before the so-called My Safe Florida Home program came out in the 2006 election. I paid State Farm's consultant to review these changes providing a whole CD of construction photos, and copies of all my sketches with the result that briefly, I had our homeowners down to $255 per year. However that increased to $485 and then 2 days ago I went through another inspection(criteria not provided), and after reviewing the situation on line I am now committed to throwing these people in prison (preferably Guantanimo). The Inspector of course, can not verify (without pictures such as I can provide) examples of very much without destructive testing. I have been a Construction Professional most of my life, have done some extraordinary things here (reinforced concrete walls, 3 safe room rfc vaults etc. and yet I am confident that despite the fact that I've never made any significant claim (electrical surge killed a new TV in '84-I installed a surge protector in the panel) before or during construction, or otherwise that my discounts will be discounted and our insurance will sky-rocket. We already have empty houses because rates were impossible on the beaches and barrier islands. We need to run the foxes out of the hen house and into prison.