Posted on September 29, 2011 by Sean Shaw

With Florida Sinkhole Rate Hikes Looming, Policyholders Stand Up in Number

I wanted to take a moment to thank all who participated in the movement against Citizens' proposed rate hikes.  All of your hard work advocating on behalf of policyholders across the state truly made a difference. Thanks to you, Floridians were saved from one of the largest insurance rate hikes this state has ever seen. You should be proud!

Together we proved that individuals can make a difference. Sure, the powerful insurance lobby has nearly unlimited resources -- we can't control that.

But we have something they don't -- power in numbers.

When we stand together in numbers, there isn't anything we can't accomplish. In that spirit Policyholders of Florida put together this video. I hope you enjoy it:
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Posted on September 8, 2011 by Sean Shaw

Florida's New Insurance Consumer Advocate Weighs In on Sinkhole Rates

Florida’s new Insurance Consumer Advocate, Robin Smith Westcott, emailed a press release to the media highlighting her attendance at our Policyholders of Florida rally in Tampa, where we protested Citizens’ massive proposed sinkhole coverage rate hikes. After this rally, when Westcott heard firsthand from policyholders, she accepted our argument that 2000% rate hikes just don’t make sense and are dangerous to our state’s economy.

The consumers I spoke with that day voiced many of the same concerns I have with this proposed rate filing. They are afraid they won’t be able to afford their living expenses and will have to default on any mortgage that requires this coverage, further depressing the housing market in the most affected areas and further devaluing their homes, which for many is their largest and only personal investment.

As one of the first people to call on Westcott to stand up for policyholders threatened by these untenable rates, I applaud her willingness to engage with homeowners. I am also hopeful that her voice will be as loud and clear during the rate hearing in Tampa later this month. After all, that is her job as the Insurance Consumer Advocate.

You can read the press release by clicking the image below:
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Posted on August 30, 2011 by Sergio Leal

It's Official! Texas Windstorm Insurance Association Raising Rates by 5%

Earlier I wrote a post about the Texas Windstorm Insurance Association (“TWIA”) considering raising rates by 5%. Well, TWIA made it official: rates will go up 5% next year for thousands of homeowners covered by the state’s storm insurer of last resort.

The Houston Chronicle reports that TWIA has filed with the state’s insurance regulators for the rate hike. The new rates will apply to both residential and commercial policies. In a letter to regulators, TWIA claimed that rates need to increase by 28% for homeowners and 35% for commercial policies!

To make matters worse for policyholders, TWIA plans to seek 5% increases annually until it considers its rates adequate to cover potential claims. In other words, TWIA will keep raising rates for the foreseeable future; TWIA has not stated how long it will take until there is enough money. Under Texas law, TWIA is allowed to raise rates by 5% without needing approval from regulators.

This is bad news for TWIA’s 244,000 policyholders. But it may also be bad news for more people in the near future, as private insurers continue to reduce or eliminate windstorm coverage along the Texas Gulf Coast.
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Posted on June 2, 2009 by Chip Merlin

Brad Ashwell States the Case to Veto the State Farm Bailout Bill

The Consumer Advocate for the Florida Public Interest Research Group,  Brad Ashwell, wrote a letter published in the Gainesville Sun calling on consumers to urge Governor Crist to veto the State Farm bailout legislation. He clearly explained how the bill will harm Floridians:

"The problem is that this bill would remove consumer protections by no longer allowing the OIR to protect Floridians from excessive or discriminatory rate hikes as Kevin McCarty and his office have successfully done time and time again.

If HB 1171 becomes law, major insurance carriers would not only be able to charge whatever they like, they would also be able to game the system by manipulating rates, quoting excessive premiums to coastal homeowners, then dropping those policies if they choose to so they can maintain and grow inland policies where there is less exposure. The lack of predictability this would create is exactly what we don’t need in a state with an already fragile and overstrained property insurance market.

And perhaps the most troublesome provision is that the bill would help further grow the surpluses of these larger insurers while preventing small Florida-based carriers from doing the same. In this way the bill aims to provide an unfair competitive advantage to larger companies by discouraging across the board competition with smaller carriers. This would ultimately harm consumers and businesses by fostering an insurance market offering fewer choices in terms of dependable insurers. It’s also important to recognize that there’s no guarantee these large companies will continue writing policies in Florida.

Rather than deregulating the market, which hasn’t worked out in the past, we should be working on policy goals that support a more competitive insurance market that provides consumers with more affordable options. In short, we need more Florida-based companies competing, not fewer large insurers who dominate the market, essentially holding homeowners hostage, charging any rate they choose."

He is right, and nobody disputes his facts. Proponents of the bill argue it gives consumers the “choice” to pay excessive rates if they want. The legislators who voted for the bill did so because of political pressure, without understanding the consequences, or because they like the incentives offered by insurance companies for their votes. Either way, the “choice” is just a way to justify this bad legislation.

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Posted on January 11, 2009 by Chip Merlin

Headlines And Reality

The Citizens Mission Review Task Force made a significant recommendation at its meeting on Tuesday. Prior testimony was that the average Florida rate hike, which would be approved by the Office of Insurance Regulation, would almost certainly be higher than 30%. We recommended to the Florida Legislature that they to pass a statute to cap that rate increase at 10%. Without this law, the rate would probably go up over 30% on a statewide basis.

So, what do you think a proper headline would be in a newspaper article reporting on this outcome? "Panel Votes to Cap Rates?" "10% Maximum Rate Increase Proposed?" How about, "Panel Says No to Unlimited Rate Increases?"

By Jingo, no way! Newspaper editors must think they need headlines full of sensationalism and fear to catch a reader’s attention. These were some of the headlines I found on a Google search on Wednesday morning:

Citizens Property Insurance Plans to Increase Rates

State Panel Backs Rate Hike of up to 20 Percent for Citizens Insurance

Citizens Should Hike Insurance Rates, Task Force Says

Hike Citizens Property Insurance Corp's Premiums, Florida Panel Urges

We never found that the rates should be hiked. Instead, a bunch of experts explained why they thought a "fair" rate was going to result in a huge increase because Citizens has been charging an amount of premium that is not "sound." Even the Florida Office of Insurance Regulation indicated that a fair rate for Citizens was one that could have an increase above 30%.

In 2006, the Florida Legislature froze Citizens rates to combat skyrocketing premiums. The Legislature then passed a law mandating that Citizens had to charge "actuarial sound rates" by January 1, 2010.

I never voted to raise rates. I advocated and then argued for the cap because I felt it was going to make insurance unaffordable for many if the rates jumped overnight.

Some panel members argued against that, but eventually voted for the caps as well. Their view was that the majority of Floridians pay a subsidy to Citizens policyholders, who are charged rates lower than what the consumer advocate calls a "fair" premium. Right now, Citizens Policyholders have the state-backed guarantee that they get paid their claims. Other policyholders with non-state subsidized insurance, pay higher but fair rates, do not have that same protection. If Citizens were a private company and not part of the government, experts told us that its rates would have to be significantly higher.

When I am hired to advocate a policyholder's position, I try to cast my client in the best light possible. I am ethically bound to zealously argue positions to my client’s best benefit. It's my job.

Newspapers have a responsibility to get it right. They should enlighten their readers with a factual recounting of the important issues of the day. That is a journalist's job.

I have no problem with a sensational headline to sell newspapers--they need the business badly. However, headlines should be factually correct and not mislead.

 
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