Florida senator wants to hurt wayward insurance companies listen02/03/09 Mitch E. Perry
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Last week, the largest private property insurer in Florida, State Farm Insurance, announced it is pulling out of the market, saying the company cannot raise premiums high enough to offset the risks from hurricane.
The final blow was the rejection of a 47 percent homeowners insurance rate increase last month by the stateâ€™s Office of Insurance Regulation.
In response, Sen. Mike Fasano of New Port Richey is proposing two specific pieces of legislation. One bill would be to prevent State Farm or any other company from selling auto insurance if it leaves the property insurance market.
Sam Miller is with the Florida Insurance Council. He calls Fasanoâ€™s proposal a feel-good measure that doesnâ€™t address the bigger problem.
The second bill Fasano plans to propose would prevent State Farm and other property insurance companies from dropping more than 2 percent of their customers in any year. A similar law was created in the aftermath of Hurricane Andrew in 1992, but has since expired.
State Farm said it will eventually cancel more than 700,000 homeowners policies, almost 80,000 condominium owners policies and almost 62,000 renters policies. Almost 58,000 boat owners would be affected, too.
Not every lawmaker agrees with Fasano, and itâ€™s unclear how much if any support he would get for his bills. He has attempted before to pass legislation penalizing insurance companies for pulling out of the property insurance market, but in his words, theyâ€™ve been "watered down."
New information could persuade others to be in a more punitive mood. The Sarasota Herald Tribune reported Tuesday that a review of State Farmâ€™s regulatory filings indicates that the insurance company collected $2.6 billion dollars more in premiums than it paid out in claims. State Farm says all that money has been used to pay expenses.
Sam Miller with the Florida Insurance Council says that state officials, like Insurance Commissioner Kevin McCarty and Chief Financial Officer Alex Sink are busy working on bringing more property insurers into the state.
State Farm denies that it has an ulterior motive in giving up on property insurance, saying it was done for financial reasons and nothing else."