In a recent Florida House of Representatives Committee, Representative Plakon (R-Longwood) introduced a bill to remove the ability of the Insurance Consumer Advocate to issue letter grades to insurance companies based on how they treat their customers. Am I missing something?

The Insurance Consumer Advocate is a position established by statute and appointed by the state CFO that looks out for all insurance consumers. The Insurance Consumer Advocate serves on various boards as a the voice of the consumer, answers direct questions of insurance consumers throughout the state, acts as the consumers’ representative in the legislative process and assists individuals with various insurance problems throughout the state. Serving as Florida’s Insurance Consumer Advocate was one of the most fulfilling professional experiences of my lifetime.

As one can imagine, the Insurance Consumer Advocate is usually a lone voice for the consumer pitted against the army of industry lobbyists operating in Tallahassee. One of those lobbyists, who happens to represent State Farm, argued at this committee meeting that the advocate position was redundant and the money could be better used “taking care of the children of our state.” Although I don’t doubt the insurance lobby’s concern for the state’s children, State Farm is in no position to lecture Floridians about “cost savings.” Their record for the last few years speaks for itself: 28% rate increase in November 2009, 15% rate increase in April of 2010, 125,000 policies cancelled in August of 2010 and a 28% increase in February or 2011. These rate increase numbers are averages; that really means that consumers in South Florida have seen TRIPLE digit increases from our “good neighbor.” I am certain that the victims of those rate increases could spend that money better elsewhere.

Let’s be frank – Representative Plakon and State Farm want to diminish the power of the only independent voice in state government that represents insurance consumers. It is not enough that the industry is pushing exceedingly anti-consumer legislation that deregulates our rates, makes it harder to file a claim, makes it harder to get your full claim paid and allows companies to discontinue sinkhole coverage. The industry is so flush with influence this legislative session that they also want to dismantle the ONLY independent voice for Floridians.

Somehow, the insurance industry has convinced our elected officials that they are losing so much money that the entire system needs to be revamped in their favor. However, the Office of Insurance Regulation recently released a study that refutes this argument. Here are the profits by line of business:

  • Fire Insurance: Premiums $702,044,756; Net Profit After Dividends $448,803,211
  • Homeowners: Premiums $4,971,640,913; Net Profit After Dividends $1,666,262,684
  • Commercial Property: Premiums $639,877,984; Net Profit After Dividends $49,479,326

Victims? Hardly.

I do not begrudge an insurance company’s right to make a profit. I understand that insurance companies have to make profits so that they can pay claims. However, I firmly disagree that the industry should be allowed to eviscerate the power of the one independent voice for consumers. Does Representative Plakon truly believe that his constituents are better served without access to information about the service and fairness of their insurance companies?

Most Floridians realize that the game is rigged in favor of large corporations. Policyholders need the Insurance Consumer Advocate to fight on their behalf in Tallahassee because it has become all too apparent that many of their elected leaders simply aren’t up to the task.

Sean M. Shaw
Former Florida Insurance Consumer Advocate (2008-2010)