Three consumer advocates published a letter, Property Insurance Deregulation Too Costly, which claims that currently proposed Florida legislation calling for no regulation of insurance rates is bad for Floridians "because the average consumer does not have the resources or information to determine when a rate is excessive, the opportunity for the [insurance] company to abuse consumers exists." I agree, and for many more reasons than just that.

The three who wrote the letter are Sean M. Shaw, Florida’s Insurance Consumer Advocate, Brad Ashwell, democracy and consumer advocate for the Florida Public Interest Research Group, and, Bill Newton, Executive Director of the Florida Consumer Action Network (FCAN). FCAN’s Blog recently posted, Insurers Record "Stellar" Profits in 2009, which noted:

According to a news report in National Underwriter, "Panelists said the relative calm of the 2009 hurricane season, as well as some reserve releases, were seen as the key reasons p&c insurers’ net income after taxes totaled $16.2 billion during the first nine months of 2009, nearly quadruple the $4.4 billion in profits earned a year earlier."

Will we see price reductions in Florida now that insurers have banked another year’s profits with no hurricanes?…

Despite the good times, the insurers keep crying. We need to see through their game and call their bluff as Insurance Commissioner Kevin McCarty did with State Farm (although later negotiations are questionable.)

Now insurers are saying that deregulation will lead to lower prices. Why should anyone believe them? Their track record is not one of truthfulness. They are exempt from anti-trust laws. If they are now making "stellar" profits, where’s the fire?

Call your legislators to put a stop to these games.

I agree with that. This is not a law dreamed up by consumers looking to solve an insurance rate problem. It was devised by the insurance industry to free it from regulation in order to charge whatever the market will bear. I believe that most legislators truly want to make society better with laws they propose and pass. The truth is that insurance lobbyists have done a wonderful job for their clients, providing significant political contributions to key legislators. In return, it is only reasonable to assume they are asking for those legislators to support their agenda.

Yet, this law does nothing for insurance consumers and I said so when it was first introduced in Do Florida Legislators Think We Are Stupid? Similarly, the consumer advocates noted the following:

The sponsors of this legislation mistakenly call this bill the "Consumer Choice" insurance bill. However, the only choice that consumers are given is between higher premiums (based on recent rate filing requests of anywhere for 25 percent to 50 percent) or a move to Citizens’ property insurance.

However, this bill does not accomplish any improvement – instead it would significantly hurt Florida’s consumers. Deregulation of our property insurance industry rates would allow insurance companies to abuse consumers through excessive rate increases and would hurt Florida financially by overburdening Citizens. We also do not see any hard evidence this bill can achieve its stated goal of attracting new companies to the state.

We call on members of the Florida Legislature to vote against the proposed deregulation bill. If this legislation should pass, we urge Gov. Crist to again veto this type of proposal. We encourage the Legislature to choose what’s in the best interest of the citizens of Florida.

Interestingly, the letter indicates what legislators will say regarding their support for the law and the false premise that it proponents sponsor:

Proponents of deregulation claim that it will bring new insurers to the market. However, no insurer has said publicly that they would enter Florida if the property insurance market were deregulated.

The truth is that if rates go through the roof because of this law, there will be more insurance available because many Floridians will not be able to afford to buy as much of it, if at all. Many will just go to another state to do business or live where it is less expensive.