Insurance - your family's financial security

Homeowner's Insurance - updates on the 2008 Legislative Session - Black Boxes -- reinsurance -- anti-trust

Life Insurance - buying guide - the real information about life insurance the companies don't want you to know

Sinkholes - the problem you don't want to hear about, but they're here.  See FCAN's video explanation of the new Pasco County Sinkhole law

Lower Homeowner Insurance Rates

Hurricanes have ravaged the Gulf Coast, and now we’re all facing much higher insurance costs. FCAN believes we must encourage sustainable development to hold insurance costs down, and make major changes in the way insurance is regulated so the community can unite against unjustified rate increases.

An Independent Insurance Consumer Advocate and greater citizen participation in insurance rate cases would give consumers the ability to challenge rates. "Black Box" models used to set rates should be examined and the Public Model fully funded for comparison. Citizens, the insurer of last resort, should be restructured so it functions like a real business.

How we got here

We all know about the hurricanes, but there are other causes for our high insurance rates. When development began to boom in Florida, back in the 70’s and 80’s, we were in a time of low hurricane activity. Now, whether you believe it is a natural cycle or global warming, NOAA scientists are telling us to expect stronger and more numerous hurricanes for at least ten years.

Perhaps, if we had known this potential existed, we might have made different decisions about risky coastal developments. Instead, Florida’s powerful developers pushed for more and more homes, condos, and businesses in coastal areas. Now, the real cost of those decisions is apparent and insurers have sent us a bill. — triple digit premium increases!

How to Lower Insurance Rates

The answer is to retrofit existing homes and build more sustainable communities. Our barrier islands offer important protection from hurricanes. We need to protect these natural hurricane barriers, not develop them. We should consider not rebuilding in coastal areas that are damaged by hurricanes. And we should immediately reconsider risky development that is already underway or planned. Its cheaper than the alternative.

These measures won’t provide instant rate relief. Nothing will. However, insurance reform will give consumers new powers to fight for lower rates and force insurers to justify what they’re charging. Some rate increases just aren’t fair and can be challenged.

Other insurance sites

● Center for Economic Justice
● Americans for Insurance Reform
● United Policyholders
● Homeowners Against Citizens
● Fair Insurance Rates in Monroe


Be a good neighbor:
lower our rates!

Profits Soar

Insurers have continued to make large profits despite the hurricanes. According to the Insurance Information Institute, insurers are on track to make a $60 BILLION profit in 2006. The Institute described this as "the best annual result in more than a half century (1955, to be exact)."

Despite these huge profits, our rates still go up, not down. Insurance reform is needed. Florida’s system is badly out of balance. Insurers make huge profits and the taxpayers are stuck with the bills. More state subsidies are just going to the insurer’s bottom line.

Insurance Profits

Insurance rates out of control

 

Consumer Agenda for Insurance Reform

2008 Legislature

Senate Bill 2860 -- contains several measures favorable to consumers including prior rate review and eliminating arbitration panels.  Currently, it looks good to pass the Senate, but is questionable in the House.

Prior Rate Approval — currently insurers have “file and use” rates. That means approval from the Insurance Commissioner is needed to raise rates. That is a reform passed in the 2007 Special Session and the result is that insurers are having to prove they deserve rate increases.  Previously, under the "use and file" system, insurers could raise rates at will, then justify them later.  Its more difficult to lower rates when they’ve already been raised. Insurers should have to prove they deserve rate increases.

Eliminate Arbitration panels -- another reform from the 2007 Special Session. Arbitration panels that were stacked in favor of the insurers were ended, but not permanently.  SB 2860 would eliminate these panels for two years, strengthening the Insurance Commissioner. The reason these panels are stacked is that the panel consisted of three people -- one picked by the commissioner, once picked by the insurance company, and one picked by those two.  That means half the panel favors the insurance company.  Without the panel, the insurer has to go to an Administrative Law Judge, who is neutral.

End Black Box models — insurer "black box" computer models are suspect, at minimum, and possible collusive. We call them black boxes because nobody can see inside. One of the companies that produces these models is actually owned by the insurance companies. All are paid by insurers. They tell their customers -- the insurers -- what they want to hear.   The public model was more accurate in 2005. Fully fund the model and allow the consumer advocate to modify assumptions.

Wind-driven water  — Currently, insurers can say hurricane storm surge is flood damage and is not covered by your windstorm insurance. This left many homeowners without coverage, even though they paid full premiums!  FCAN supports an all-perils policy which would provide true security to the homeowner.

Insurer Loyalty — If you have paid your premiums for three years and have filed no claims, you can’t be canceled for no reason.

Consumer Participation in rate reviews rate filings would http://www.fcan.org/Insurance/consumerpriorities.pdf be open to the public and consumer groups may participate in rate increase hearings.

Living expenses — must be paid within 48 hours after a hurricane.

Fixing Citizens

Citizens is the state-run "insurer of last resort" and is now the largest homeowner’s insurer.

Citizens has too many risky coastal properties that have been dropped by mainstream insurers. These would normally be lucrative customers (big houses, nice cars, lots of income) but Citizens isn’t allowed to sell other lines of insurance. Instead, the insurance companies can "cherry pick" the best business leaving Citizens stuck with very high rates.

Citizen’s coverage should be priced according to actuarial standards. Why not?

Citizens should be allowed to sell other lines of insurance to their customers to balance their portfolio. Otherwise, "cherry picking" insurers should have to help support Citizens. This would encourage them to start selling to coastal customers again.

We'd like to see:

Repeal Insurance Anti Trust Exemption — Insurance companies have been exempt from the Sherman Anti-trust act since 1948. That means insurance companies can legally fix prices and collude. No other business gets this kind of break. The NY Attorney General recently busted several large insurers on bid rigging and fraud charges. Many think this criminal behavior in the insurance industry is encouraged by anti-trust exemptions.

Restore the trust between insurance agents and their customers. Eliminate so-called contingent fees that encourage agents to sell poor policies to consumers to earn high fees.

Title Insurance — rates are currently set by law and no competition exists. Clean up title insurance and allow companies to compete, lowering prices for consumers.

Write or Call
your Legislators

Governor Charlie Crist
The Capitol
Tallahassee, FL 32399
(850) 488-4441

Representative Ron Reagan
Chair Jobs and Entrepreneurship Council
402 S Monroe
Tallahassee, FL  32399
(850) 488-6341 

Senator Bill Posey
Chair, Insurance Committee
316 Senate Office Bldg
Tallahassee, FL 32399
(850) 487-5106

Key points to include in your letter:

Insurer lobbying expenses are part of your premiums!