Indianapolis (Jan. 18, 2007) – Insurance reform bills being considered this week by Florida lawmakers will not solve the state’s insurance crisis, and instead will make the situation worse, a senior official of the National Association of Mutual Insurance Companies said today.
“In a desire to find rate relief for homeowners, Florida lawmakers may have unwittingly enacted bills in their respective chambers this week that are possibly illegal and certainly will do nothing to keep some insurers from wanting to leave the state,” said Neil Alldredge, vice president of state and regulatory affairs.
Alldredge said provisions requiring insurers who write homeowner’s insurance in other states to write the same coverage in Florida or requiring auto insurance-only companies to now write homeowners is not only absurd, but may be unconstitutional as well.
“This is like suddenly telling an electrician that he now also has to become a plumber,” Alldredge said.
Alldredge also objected to a series of other provisions, many of which are contained in the House bill. They include forcing insurers to place a 90-day time limit on paying claims after a storm, prohibiting insurers from denying coverage based solely on the age of a home, or requiring insurers to factor the profits of national affiliate companies into rate filings and prohibiting “excess” profits by property insurers.
“This everything-but-the-kitchen-sink approach is no way to legislate,” Alldredge said, who added that he hoped lawmakers, now meeting in a conference committee, would take a more deliberative approach on some of these provisions.
“The best outcome would be for lawmakers to throw away their special session bills and agree instead to come back when their regular session begins in March with a plan to formulate a long-term solution instead of this hurried approach,” Alldredge said. “Rome wasn’t built in a day, and solving Florida’s insurance market problems will take longer than a seven-day special session.”
He added that any long-term solution must include a serious discussion of land use reform.
“You can’t have nearly two trillion dollars in coastal exposure, restrict actuarially sound rates and expect insurers to stay in the market. It’s a solution that is not going to work,” Alldredge said.
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Posted: Thursday, January 18, 2007 12:00:00 AM. Modified: Friday, January 19, 2007 10:16:25 AM.
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