Property Bill Is Only the Beginning

In the eyes of consumers and insurance groups, the massive property insurance bill that passed during the waning hours of the 2010 legislative session is a study in compromise. While declaring that he is “not overly enthusiastic about the bill,” Florida Insurance Consumer Advocate Sean Shaw did concede that the legislation benefits both companies and consumers. Most stakeholders seem to agree, offering lukewarm and cautious praise or condemnation. Even one of the bill’s sponsors, Sen. Garrett Richter (R-Naples), said the legislation was only the beginning of the long process of solving the state’s property insurance challenges. The bill does bring significant changes regarding property insurance rates and cost drivers. It allows insurers to apply 10 percent increases on premiums under certain conditions, and restricts the amount of time homeowners can file a claim after a storm to three years (down from five). That lower deadline was hard fought on both sides — the industry, which sought the time limits to stem the flow of new and reopened claims seen after the 2005 storms, and the public adjusters, who viewed it as a major restriction on how they operate in Florida. The bill also reauthorizes a 2009 requirement that insurers get state permission for rate hikes, and requires insurers to file detailed financial information about affiliates they hire for some services, addressing the recent publicized concern of so-called “hidden profits.” Insurers also may now withhold part of a claim payout until policyholders can demonstrate the funds will actually be used to make repairs. Florida Insurance Commissioner Kevin McCarty declared soon after the bill passed that he generally supported the legislation. This may put him at odds with Gov. Charlie Crist, an unusual position. The two are normally in lockstep when it comes to insurance matters. Crist has not offered significant opinions yet on the bill, but has repeatedly declared that he will veto any legislation that includes increases in premiums. The bill has not yet been presented to the governor.