The Florida Consumer Action Network (FCAN) has urged Florida Governor Charlie Crist to veto recently passed legislation that would allow insurers to raise rates without approval by the Office of Insurance Regulation. FCAN is probably Florida’s largest consumer action group. The Bradenton Herald quoted foes of the legislation who refer to the bill as "the State Farm bailout bill." I agree.
In an earlier post on this topic, I noted:
"The argument that Florida should allow insurers to charge whatever they want because they will sell more insurance is ignorant. Studies have shown more insurance will not be the result. There is a limited amount of insurance coverage at any price in Florida. It is not a free market. Most people simply have not studied the literature and reports on this issue and assume that if insurers can make more money on higher premiums, more insurers will sell insurance in Florida. These studied findings were made to the Citizens Mission Review Task Force which I was part of. No legislators were there to listen and learn.
Many proponents of rate deregulation (including our legislators) make uninformed decisions on the issue, and then offer ignorant opinions and answers to a difficult issue. Other leaders supporting this issue are probably just pandering to State Farm and the insurance industry. "
The Herald noted what most, except those in the insurance industry and masochists wishing for higher premiums, think of the proposed legislation:
‘Those who object to the bill, such as leaders of the Florida Consumer Action Network, among the state’s largest consumer groups, said it is really an insurance company choice, not a consumer’s choice. They said big companies can choose to charge higher rates with unpredictable consequences and potential disruption of the market.
“We advise people currently in Citizens to stay there,” said Bill Newton, executive director of the network. “If you can go to one of the smaller companies in the market, you should go. They’re backed up by the state, protected, completely safe in my opinion. We need to foster more competition, you can’t have a market dominated by the big four or five.”
Sometimes, the insurance industry obtains anti-consumer legislation, such as the Surplus Lines Law that we warned about yesterday, because few understand the implications or take notice. I am happy that others realize this proposed law does nothing but help insurance companies — to the detriment of their customers.