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Letter to the editor

Senate gets in line to grill insurers

At hearings, state senators will ask why rates have yet to decrease a year after legislation.

By JENNIFER LIBERTO, Times Staff Writer
Published January 11, 2008

TALLAHASSEE - If there's a battle between Gov. Charlie Crist and the insurance industry, the Florida Senate picked its side on Thursday.

The Senate is the latest governmental entity to say it is going to haul in insurance executives, subpoena them if necessary, and grill them on why property insurance rates haven't gone down. The hearings come a year after the Legislature passed an insurance package that aimed to cut rates by offering insurers cheap state reinsurance, which also increased the risk that taxpayers could get assessed to pay for major hurricanes.

Key Florida senators said Thursday that they have created a special group dubbed the Property Insurance Accountability Committee, whose members would question insurers about pricing practices. Twenty senators with insurance and legal policy experience plan to meet Feb. 4-5 for the hearings. Senators weren't prepared to say Thursday who they planned to put on the hot seat.

"You didn't just break your word, you broke the law," said North Palm Beach Republican Jeff Atwater, addressing the insurance industry. "The invitation is on its way. The day of reckoning is here. And relief is coming," said Atwater, who is expected to be the next Senate president.

Last year, Crist held a news conference with the state's insurance commissioner and pretty much said the same thing, announcing that regulators would be asking similar questions. Already, the Office of Insurance Regulation has held several rate hearings, during which actuaries and lawyers have grilled insurers about pricing practices. Next week, regulators plan to go a step further with another public hearing, for which they subpoenaed Allstate executives in an effort to discuss the company's underwriting practices.

In addition, the Attorney General's Office has launched an inquiry about rates and insurers' relationships with rating agencies and modeling companies, OIR and Senate insurance chief Bill Posey confirmed.

In the meantime, the governor has enlisted three high-powered trial lawyers to look into a class-action lawsuit against Florida's insurance industry for possibly conspiring to artificially inflate homeowners rates.

"It might be some politics, but it's good," said Bob Hunter, an insurance consumer advocate and actuary whom the state hired last year to calculate rate savings from the property insurance package. "You can't have too many people looking into this."

Those in the insurance industry warn that such political "piling on" could scare the private market away. The state-run Citizens Property Insurance Corp. already insures nearly a third of all homes in Florida.

"My fear is we're headed toward a government-only insurance market," said William Stander of the Property Casualty Insurers Association of America. "We're moving so quickly now downhill on a road we shouldn't be on."

Crist released a statement supporting the hearings. House Speaker Marco Rubio said through spokeswoman Jill Chamberlin that the House also supported the hearings, although that chamber will not be involved.

"It's a very important issue. We'll do what we can to cooperate," Chamberlin said.

Times staff writer Tom Zucco contributed to this report. Jennifer Liberto can be reached at liberto@sptimes.com.

[Last modified January 10, 2008, 22:52:44]