January 23, 2008

Florida Senate Select Committee on Property Insurance Accountability Takes Testimony from Bob Hunter and Kevin McCarty; Industry Provides Counterpoint During Media Briefing

At the close of yesterday’s hearing of the Florida Senate Select Committee on Property Insurance Accountability, co-chair Sen. Steve Geller directed his concluding remarks to insurance industry representatives in attendance. He commented that we could all be a “happy family” when insurance rates are lowered. It was a “bottom-line” wrap-up of a full day of discussion about the property insurance situation in the state.

Florida Insurance Commissioner Kevin McCarty and Consumer Federation of America Insurance Director Bob Hunter presented sworn testimony to the committee, with much of their comments focused on the content of “true-up” rate filings that have been denied or are pending. Sen. Alex Villalobos, a lawyer and chair of the Senate Judiciary Committee, pressed McCarty and Hunter several times to directly accuse insurance companies of breaking the law. Both stopped short of saying that explicitly however, instead saying they are “deeply troubled” and that “the probability exists.”

Part of Hunter’s testimony was devoted to the CFA report regarding insurer profitability released recently. By doing so, he continues to promote the illusion that insurers doing business in Florida must be gouging customers if they are making so much money. Hunter and McCarty also reviewed the HB1A requirements and how the “presumed factor” was determined. There were quite a few questions from committee members about reinsurers and rating agencies.

Sens. Carey Baker, Ted Deutch, and Jeremy Ring were allowed to ask questions and make statements revealing some skepticism about the testimony presented and the events that have unfolded to date. Sen. Baker said he “appreciate(s) why we have to do this, but I have concerns about my constituents in the middle of the state … I don’t want to shift the cost to my folks.” He also pointed out that he is a Florida Farm Bureau member and represents many farmers in his district. He knows that “Florida Farm Bureau Insurance is losing $2 million a month – so how can their rates be enough?”

Sen. Deutch pointed out that only critics of the insurance community testified during yesterday’s hearing. He asked that all parties be represented at subsequent hearings to help legislators "get to the truth." And Sen. Ring referred back to McCarty and Hunter’s review of how the rate on line for the additional CAT fund purchase was determined, asking “if there was a 95 percent discount for reinsurance, why couldn’t we sell more?”

The committee will meet again Feb. 4-5 for sworn testimony from “invited” company executives from Allstate Floridian, Hartford companies, Florida Farm Bureau Insurance Company, American Strategic Insurance Company, and Nationwide Insurance Company of Florida.

In an attempt to balance the negative testimony we expected (and witnessed) from the Senate Select Committee hearing, NAMIC joined with advocacy partner, the Florida Insurance Council (FIC), and other national trades to provide a media briefing early yesterday. Insurance Information Institute (III) President Bob Hartwig and Nancy Watkins, an actuary with Milliman, made presentations to Florida media gathered by conference call and in person. Attendees included:

(In Person)

• Associated Press
  Brent Kallestad
• Associated Press TV
  Dave Heller
• Capital News Service
  Mike Vasilinda (producer/reporter)
  Tom Urban (videographer)
• Florida Radio Network
  Rick Flagg
• Tallahassee Democrat
  Bill Cotterell
• Tampa Tribune
  Collin Hackley
• WFSU/Florida Channel
  Gary Williams (producer/reporter)
  Jackson Peel

(Conferenced In)

• Tampa Tribune
  Jerry Stockfisch
• Daytona Beach News-Journal
  Jim Saunders
• St. Petersburg Times
  Tim Zucco
• South Florida Sun-Sentinel
  Julie Patel
• Orlando Sentinel
  >Anika Myers Palm
• Florida Public Radio
  James Call
• Florida Underwriter
  Mike Vogel

We believe our efforts to “get ahead of the story” with our media briefing paid off, and it was especially helpful that Dr. Hartwig could stay through the Senate hearing and be available to talk with reporters. Please see below for links to news articles that have been posted so far.

It was impossible to erase the anti-industry rhetoric that was a foregone conclusion of the meeting, but stories had some balance because we provided facts and information in a rational manner.

• Critic hints insurers broke law (St. Petersburg Times)
• Panel Begins Insurance Investigation (Tampa Tribune)
• Insurance officials defend rates (Miami Herald)
• Special panel to review issues with property insurers (Florida Times-Union)
• State senators question why homeowner insurance rates remain high (South Florida Sun-Sentinel)
• Official: Fla. doing well for insurance companies (Tallahassee Democrat)

In other news from Florida’s capitol, the Senate Banking and Insurance Committee met prior to the Select Committee hearing, and more misconceptions about property insurance rates popped up. During a presentation about the My Safe Florida Home program for inspections and retrofit grants, Sen. Don Gaetz asked “If My Safe Florida results in a 36 percent increase in hurricane resistance, does that mean you should have a corresponding 36 percent reduction in insurance costs?”

The Banking and Insurance Committee also took up the issue of whether companies’ credit scoring methodologies should continue to have a public records exemption for trade secrets. Committee staff director Brian Deffenbaugh recommended credit scoring methodologies remain a trade secret, against the recommendation of the OIR. If the committee takes no action, the exemption will sunset Oct. 2, 2008. “So this is one of those rare cases when we do nothing and good things happen?” asked Sen. Gaetz.

NAMIC will continue to work with member companies and other industry representatives as we encourage cooperation, not controversy, to achieve the solutions Florida so desperately needs.

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COMMENTS: Please direct all requests or comments to Director of Communications Jon Gorman at jgorman@namic.org, or NAMIC Advocacy Alert, 3601 Vincennes Rd., Indianapolis, IN 46268.

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