Florida Insurance Commissioner Kevin McCarty is working tirelessly for fair treatment of insurance consumers. It is amusing that the Florida legislature may give into State Farm’s bullying and even allow higher insurance rates, which McCarty says are unnecessary. Some of our legislators are pandering to State Farm and the Florida insurance industry by using the usual "word spin" games. Deregulating rates under the guise of "consumer choice" will simply lead to higher premiums.

Voters are not stupid, and McCarty is calling out those that are supporting this anti-consumer legislation with a published comment on the matter. I found this especially significant to the debate:

"When I pointedly ask industry representatives how much more business they would write if they could get any rate they wanted, the serious answers I get back range from marginally more to none. Again, because of the moderate to severe hurricane risk across the entire state of Florida, the risk of ruin from catastrophic loss outweighs any potential premium income in their management models.

That said, we continue to look into this issue. Proponents of complete rate deregulation assert that it would provide a better competitive outcome. Following basic economic theory, therefore, markets with rate deregulation should exhibit lower prices and a lower degree of market concentration, all else being equal. These are easily verifiable empirical results, and there is plenty of data available with which to test this hypothesis. I would encourage the competitive market advocates to undertake such an analysis. Our own internal looks at the potential effects of market deregulation have not found support for the proposition.

Prior to Florida’s legislative changes of 2007, the rate review process for property insurance was identical to the process used for all other property/casualty lines of business — about which there is no industry outcry. The biggest difference, yet again, is the pricing of the catastrophic component of hurricane risk embodied in property insurance. This component of pricing is what makes underwriting hurricane exposed property such a challenge for insurers, regulators and the public."

Julie Patel of the Sun Sentinel followed up with this in a story, Home insurance rates to rise, top regulator says. She noted that when the Sun Sentinel inquired from several insurers whether they would sell more insurance if their rates were allowed to be raised, none of them indicated in the affirmative.

State Farm is not only behind trying to get Florida legislators to pass laws allowing for unregulated rate increases, it is battling the State of Florida in the administrative courts as well. The St. Petersburg Times reported Thursday that McCarty has reached an impasse with State Farm over its withdrawal from Florida, and he has referred the matter to the administrative courts for a hearing on the matter.

Eventually, the large corporate giant known as State Farm may prevail through hardball litigation or significant lobbying and propaganda. What human could get away with such treatment or have such resources to even try to change the rules of the game?

Some may start to question whether such business entities should be allowed to legally wield such power. The people reviewing State Farm’s arguments have indicated that its justification for the rate increase was not factually sound. The Florida Insurance Commissioner has questioned State Farm’s fitness to operate in Florida. It appears that State Farm may have found Florida’s soft underbelly in some of Florida’s legislators.