FCAN
Join Our Mailing List
Email:

Insurance - your family's financial security

Page Highlights

PIP - Personal Injury Protection auto insurance. FCAN supports S 1860 by Senator Negron. It fights fraud and doesn't take away consumer rights.  Read more here.

Homeowner's Insurance - updates on  Legislative action, Congress, and the home insurance market. Black Boxes -- reinsurance -- anti-trust.  So far, 2012's major insurance bill would allow surplus lines carriers to take policies out of Citizens.  You might save money up front, but pay a lot more later.

Sinkhole Insurance - learn what the insurance companies and legislators are up to.

Insurance Rates Must Be Affordable - by Senator Mike Fasano - an analysis of deregulation.

Reinsurance

FCAN and a coalition of allies oppose the Neal bill, which is an attempt to tax offshore reinsurance companies -- companies that Floridians depend on to reduce our hurricane risk. Rep. Richard Neal's (D-MA) bill -- H.R. 3424 -- to raise taxes on foreign based insurance companies operating within the United States is anti-consumer and anti-competitive.

FCAN joined with the Coalition for Competitive Insurance Rates (CCIR) and voiced its strong opposition to the bill. CCIR, a broad-based alliance dedicated to assuring competitive insurance costs and insurance availability for American consumers, contends that the bill would drive up consumer insurance rates by reducing competition and critical US insurance capacity. When Neal introduced similar legislation in the 110th Congress, consumer organizations and businesses that rely on affordable insurance coverage joined in opposing passage.

FCAN believes that the international insurance market is an essential component of our ability to provide protection to homeowners and businesses. This tax increase proposal would in all likelihood have adverse consequences for consumers. Given today's financial and economic conditions now is certainly not the time to make access to insurance more costly.
(Feb 2, 2010 press release)
(July 30, 2009 press release)

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

PIP Personal Injury Protection Auto Insurance

There are now two competing PIP (Personal Injury Protection) bills in the Legislature. Sen. Negron introduced S 1860 which FCAN supports and the House bill, H 119, by Representative Boyd is also known as the ECC or Emergency Care Coverage bill.

The Negron bill will curb PIP fraud with more law enforcement and more restrictions on clinics and professionals that might be used for fraud. The Tampa Bay Times supported the bill in this editorial.

The ECC bill says that to get any PIP benefits, victims must go the emergency room and may only be treated by a couple types of doctors, and would not be eligible for any other treatment unless prescribed for the injuries detected at the hospital. Hospital emergency rooms are already overcrowded and the ER is the most expensive way to treat anyone. The ECC bill would just make things worse and people would not get the care they need.

If you miss out on your PIP benefits because of ECC or if your use up your $10,000 of PIP benefits, your health insurance kicks in. So, the ECC bill would mean health insurance companies would pay more of the costs for auto injuries meaning that, yeah, your health insurance premiums would go up. 

Of course, the ECC bill cuts attorney fees, so if you’re not happy with how your insurance company treats you, too bad. You won’t be able to sue. But your insurance company will have no limit on how much they can spend on attorneys and investigators, and then pass along to ratepayers through higher premiums. Governor Scott has hired a PR company and created a campaign called Gear Up, which staged some accidents for reporters and held a rally at the Capitol. He say’s he’s going to fix the “billion dollar PIP tax.”  He offers no proof that there is a billion dollars of additional PIP costs, and Sen. Negron said that the number was imaginary. 

FCAN believes that the ECC bill is too radical for many legislators in an election year. FCAN is working with a coalition that includes health care providers, hospitals, attorneys, consumer groups, and health care advocacy groups. We think we’ve been able to debunk some of the myths about PIP and show people why it matters.

PIP is sometimes the only insurance auto crash victims have. That means it’s the only money hospitals and doctors get paid, no matter how expensive the treatment and it can be veryexpensive. PIP helps keep health care provider and hospital ledgers in balance.  Yes, we do need to stop fraud, but the way to do it is through dedicated fraud prosecutors and law enforcement teams. We know that works.

Cracking down on crooks is the answer, not taking benefits from consumers.  Reach your legislators at http://flsenate.gov/Senators/Find or call them at (850) 488-4371.  Tell them to support the Negron Bill, S 1860, a reasonable way to stop PIP fraud.

 

Lower Homeowner Insurance Rates

Hurricanes have ravaged the Gulf Coast, and now we're all facing much higher insurance costs, the highest in the US. 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.

FCAN supports an Independent Insurance Consumer Advocate, similar to the Public Counsel office for utility rates. FCAN also wants 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 because they are fundamentally flawed.  Citizens, the insurer of last resort, should be allowed to compete against the private market until insurers agree to take all applicants.

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, but no one is certain.

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.

We face a situation where the state has too much risk and is not using the mechanism of reinsurance to spread risk.  Citizens rates were frozen for several years, and are now limited to 10% annual increases. "Acturially sound"rates could lead to either higher or lower rates, but current rates may not longer reflect of actual risks. 

Rates may go up, but FCAN supports giving consumers the tools to lower their insurance bills through My Safe Florida Homes, mitigation discounts, and strong regulation.

Other insurance sites


Be a good neighbor:
lower our rates!

Profits Soar Despite Hurricanes

Insurers have continued to make large profits, especially since we have not had a hurricane here in 5 years.  According to the Insurance Information Institute (III), "the P/C insurance industry will record positive growth in 2010".  And III said, "profit totaled $26.7 billion during the first nine months of 2010", another solid year.  According to the Insurance Information Institute, insurers mad 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)."  2007 brought another $63.4 billion but 2008 ended lower, with only $3o billion in profits.  Shareholders could expect a measly 9.5% return on their investments according to Fitch Ratings.

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.

Black Box Models Overstate Risk

A new study by Karen Clark & Company, a modeling, risk and risk management firm which actually invented the models years ago, says current models "significantly overestimated” losses during the five-year period.  Clark says, "Catastrophe modelers, through their near-term models, have overshot actual insured losses for 2006 through 2010 by as much as $53 billion. "

Clark says useing just five years of data is not a credible way of estimating the probability of hurricane landfall. After all, we've had no hurricanes in five years, so shouldn't the probability be zero?

The black box models have raised insurance company profits. They gave insurers a reason to dump some of their riskist customers, while increasing rates on the rest. Insurers have a history of using third parties to justify high rates.  Historically, insurance companies used "rating services" which collected information on claims and other data, or companies "cooperated" to set rates. This became embarassing sometime in the nineties, and the models began. It's really the same game on a new board.

 

Insurance Profits

The Insurance Cycle

As the following graphic shows, the insurance cycle occurs every 8 to 10 years.  We are currently entering what is known as a soft market, with low demand for policies and more competition between insurers.  That should result in lower prices, but Floridians can tell you, that is a long time coming. 

Insurers used new computer models, called "black boxes" to increase profits in the last several years.  These use short term 5 year risk models instead of basing premiums on past claims, for which 50 years or more of data exists.

 

Insurance cycle

 

 

Consumer Agenda for Insurance Reform

2012 Legislature

FCAN Would Like To See:

Sinkholes - people need sinkhole insurance. They are real and they destroy homes. Currently, many people run the risk with no coverage.  The Legislature isn't looking at the issue.

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.

Independent Insurance Consumer Advocate -- current the ICA works for the CFO, an elected official. That means the Consumer Advocate can be fired for taking a position contrary to the CFO, which has happened.  It also opens the ICA office to politics.

Consumer Participation in rate reviews -- rate filings would be open to the public and consumer groups may participate in rate increase hearings.

Intervener compensation in rate reviews -- it is nearly impossible for citizen groups to participate in insurance rate cases.  Groups that do participate meaningfully should recieve compensation for their work.

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 should be run like a business to serve its customers - the policyholders. Unfortunately, Governor Scott is intent on closing Citizens and appoints board members who agree with his philosophy. Is that any way to run a company?

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 Rick Scott
The Capitol
Tallahassee, FL 32399
(850) 488-4441

Senator Ronda Storms (R - Brandon)
421 Lithia Pinecrest Road
Brandon, FL 33511
(813) 651-2189

Senator Don Gaetz (R - Destin)
420 Senate Office Bldg
Tallahassee, FL 32399
1-866-450-4366 (toll free)

Key points to include in your letter:

Insurer lobbying expenses are part of your premiums!