Insurance - your family's financial security

Homeowner's Insurance - updates on  Legislative action, Congress, and the home insurance market. Black Boxes -- reinsurance -- anti-trust.  Here is a summary of S 2044 as passed by the Legislature this year.

Florida Legislators, led by Senator Mike Bennett of Bradenton, are trying again to "deregulate" homeowner insurance. Florida has the highest homeowner insurance rates in the nation, and their deregulation proposal would cause rates to rise up to 50% more.  We can't afford it.  Write to the legislature today, and demand that they stop this foolhardy plan.

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

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 a strong Insurance Consumer Advocate, such as we currently have under CFO Alex Sink,  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 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.

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.

In 2009, we face a situation where the state has too much risk and is not using the mechanism of reinsurance to spread risk.  Citizens rates have been frozen for several years, leading to a situation where the rates are not longer reflective of actual risks. 

No doubt, rates will go up for many reasons, but FCAN supports goving 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 despite the hurricanes. 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.

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

2010 Legislature

No rate deregulation - oppose S 876 by Sen Bennett which would allow insurance companies to raise rates at will.  This would cause skyrocketing rates.

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.

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.  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 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

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

Senator Mike Fasano
President Pro Tem
404 Senate Office Bldg
Tallahassee, FL 32399
(727) 848-5885

Key points to include in your letter:

Insurer lobbying expenses are part of your premiums!