Florida Senator Mike Fasano, a public servant ever vigilant about consumers of regulated industries getting ripped by the amounts they have to pay for mandated services and products, forwarded a recent news article, “Group Backs Florida Property Insurance Rate Hike.” When the Florida legislators and Governor were concerned about the severe escalation of property insurance premiums following the 2004 and 2005 storm seasons, they froze the rates charged by Citizens Property Insurance Corporation. Governor Charlie Crist ran for elected office on a platform of preventing the severe escalation of such prices. At that time, many of Florida’s legislators ran their political campaigns suggesting they were no friend of the insurance industry that was raising rates in an extraordinary manner. While Governor Crist proved he is a man of his word by vetoing legislation which would have allowed major insurers to charge whatever they want, only a few elected legislators seem to remember the promises they made to their electorate. Associated Industries supports those politicians that are more concerned about insurers profits than the promises to their constituents—except when elections are around the corner.
Florida insurance regulators are failing in their duties if they don’t make the state-backed Citizens Property Insurance Corp. raise property insurance rates by 10 percent across the board, a business group lobbyist said Tuesday.
Barney Bishop III, president of Associated Industries of Florida, said it’s ”astonishing” that the state-backed insurer would not increase rates on all policies by 10 percent.
”It is our position that every rate should go up,” Bishop told representatives from the Office of Insurance Regulation. ”The rates haven’t been actuarially sound for the last five years.’
In response, Belinda Miller of the Florida Office of Insurance Regulation disagreed:
Miller argued the 10 percent was a cap set by lawmakers and not intended to be applied equally to all Citizens’ policy holders.
”We don’t want to increase rates too quickly because people would have a hard time paying for it.” Miller said. ”Nor do we want to have a rate that is not adequate to pay their claims. Our concern is to make sure that this strikes the appropriate balance.”
This is a topic that Belinda Miller knows very well. She served with me on the Citizens Property Insurance Mission Review Task Force. I wrote about this issue last January in Headlines And Reality. There, I wrote:
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 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.
It is obvious that Belinda Miller is correct and Barney Bishop is spewing the propaganda of the insurance industry that is a big supporter of Associated Industries. The entire debate and method contemplated that overall rates would go up, but it would vary.
What is happening is that lobbying organizations supporting the insurance industry have already paid significant monies to the leaders in the Florida legislature. Now, they have to start raising the issues important to them for the next legislative session. Those lobbyists cannot come out and say, “hey, we paid you all this money to have dinner with you, go to golf and raise money for your next campaign, so vote our way.” That would be stupid because those legislators would be any “easy mark” for being in the pocket of those lobbyists. Then, what would they say to their electorate?
The smart way to do it is to have people like Barney Bishop say that the problem is Citizens not charging enough. Public relations experts have people like Barney Bishop also change the debate to one of “free choice” so that State Farm and others will no longer have to worry about getting approval for a fair rate. It is all part of the charade to allow many bought and paid for legislators to vote in a demanded manner by the insurance industry.
It is fortunate that some leaders in Florida, like Governor Crist, remember the public promises they make to the people are far more important than privately taking excessive amounts of campaign money from huge insurance corporations knowing that clandestine public relations campaigns will be run by those corporations to mask the private “deal” made with the devil.
I am going to propose to United Policyholders or other consumer groups that we try to find out who is taking the money and disclose which politicians have switched their votes since 2006 to allow rates to go up. They might as well be honest about it the next time election time rolls around.