The American Consumer Institute Center for Citizen Research (ACI) today applauded Florida Governor Rick Scott for signing into law Senate Bill 408, the omnibus property insurance legislation.
“It is my strong view that SB 408 represents meaningful and pro-consumer reforms that will encourage competition, increase policyholder surplus and protect consumers from insurer insolvencies,” said ACI President Steve Pociask.
A recent ACI study found that price regulation of insurance in Florida has pushed insurance companies away from coastal areas and out of the state, as well as reducing policyholder surplus necessary for consumer protection. Just 15 years ago, Floridians were paying 30 percent above the U.S. average for homeowner’s insurance, but today they are paying 90 percent above the U.S. average.
“Price regulation has been a dismal failure for Floridians,” Pociask said.
Senate Bill 408 would provide for some pricing flexibility, which will encourage a healthy property insurance market, increase rivalry and attract much needed capital back into the state. That capital is essential in assuring that consumers get their claims paid.
The bill also addresses fraud and other cost drivers, which have pushed up consumer prices. “By encouraging the market to work properly for the benefit of consumers, Senate Bill 408 is a step in the right direction,” Pociask said.
Pociask noted that Governor Scott signed the bill into law on a day that Ash Williams, Executive Director of the State Board of Administration, told the Governor and Florida Cabinet that the SBA may have to come back to the Cabinet to seek additional state funding to pay off a flurry of last-minute claims filed from the 2005 hurricane season.
According to press reports, Williams told reporters that the additional claims – filed five years after storms struck Florida – were likely spurred by “a bad economy, permissive laws and the emergence of an industry specializing in suing insurance companies.” The 2004 and 2005 hurricane seasons have cost nearly $10 billion in claims thus far, and last year, the Florida Hurricane Catastrophe Fund was forced to ask for, and received, an additional $674 million to pay 2005 claims.
Taxpayers are on the hook to pay off these late filed claims, which are often spurred by trial attorneys and public insurance adjusters who contact homeowners. Senate Bill 408 will help address this problem by reducing from five years to three years the time period allowed to file claims after a hurricane, Pociask said.
“As a 501c3 nonprofit educational and research institute, the American Consumer Institute cannot endorse legislation, but we view common sense insurance reforms such as Senate Bill 408 as being essential to increasing consumer benefits and welfare,” Pociask said.