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Date of Issue: April 19, 2007

Insurance: 'Slugfest' for insurers, regulators, Islanders

State Rep. Bill Galvano (R-68) says state regulations have increased and insurance companies don't like it. Islander Photos: Molly McCartney
State Sen. Mike Bennett (R-21) says the Florida insurance problem canít be solved "until you have deregulation."
This is the new look on the Internet of Citizens Property Insurance Corp., the stateís insurer of last resort. The Web site address is

One legislator calls it a "bit of a slugfest" between insurance companies and state insurance officials.

He's talking about last week's announcement by USAA, Florida's fourth-largest property insurer, to drop 27,000 homeowner policies and restrict new business because of the state's "untenable property insurance market."

USAA, which serves members of the U.S. military and their families, said in an April 11 letter to its policyholders that recent legislative and regulatory actions in Florida "have created an untenable property insurance market" that makes it hard for insurers to get adequate premiums for their policies.

As a result, the letter said, USAA will not renew about 10 percent of its 270,000 Florida policyholders.

In published reports about its decision, the company gave two specific complaints. One concerns the Florida Office of Insurance Regulation decision in December to approve a premium increase of only 16.3 percent for USAA, substantially less than the 40 percent increase it requested.

And the state insurance law changed dramatically in January. Under the newly approved legislation, insurers must file new rates that reflect their savings from the purchase of less expensive reinsurance from the Florida Hurricane Catastrophe Fund. State regulators are now reviewing the USAA proposal for a rate decrease of about 1 percent. That compares to the average 24 percent rate reduction that state officials have said they expect insurance companies to achieve under the new law.

The second USAA complaint is that Citizens Property Insurance Corp., the state's insurer of last resort, is being allowed to charge rates that could undercut private carriers.

Company spokesman David Snowden was quoted Saturday in the Sarasota Herald-Tribune as saying: "The kicker is that when Citizens runs into financial difficulty, the state allows it to recoup losses from all the people of Florida."

State Rep. Bill Galvano (R-68), who represents Anna Maria Island and other parts of western Manatee County, has another view of the comments that USAA and other insurers have been making about their decision to drop thousands of Florida policyholders:

"We take note of what they are saying and what they are doing," Galvano said.

"But the reality is that there is a bit of a slugfest going on right now," he said. "Regulations have increased substantially and insurers don't like it. We just have to hold firm, not ignoring what they say but holding firm on what is necessary to make our state as susceptible to low rates as possible."

Galvano, who has been a leader in looking for solutions to the insurance crisis, said he "feels good" about the progress that the Legislature made this past week in moving along proposed insurance reforms.

He said the "original glitch bill," which was intended to correct errors and mistakes in the January insurance legislation, has not come back to the floor for a vote. "People are working on that to make sure that we are not going backward on the reforms we made in January," he said.

Meantime, there are other legislative proposals "that would accomplish what the special session in January did not do," Galvano said.

One of the proposals would give more flexibility to Citizens and could mean lower rates. The bill would also ban the formation of any new "pup" companies. At present, four national insurance companies - Allstate, State Farm, Nationwide and Travelers - have Florida-only subsidiaries known as "pups." The pups have the effect of protecting their national policyholders from Florida losses when a hurricane occurs. No further pups could be created in Florida under the proposed legislation.

The bill passed the House Jobs and Entrepreneurship Council after a special appearance by Gov. Charlie Crist, who campaigned against the creation of more "pups."

"To have the governor come before that council is an uncommon occurrence," Galvano said. "His appearance there is a real statement by the executive branch to support the measure. He likes it because his approach is that if we have insurers who can't offer reasonable rates and who say they have to leave … then we need to pick up the slack. He has no problem with Citizens being the people's insurance company, and this legislation will help Citizens accomplish that. That is where he is."

Galvano said he personally is supporting the measure and the idea to "continue to try and accomplish what we didn't accomplish in the special session and to have Citizens have the most reasonable rate plans.

Crist also appeared before the state Senate Banking and Insurance Committee in support of a companion bill to the House version.

Under the Senate version, a homeowner could opt for Citizens if he has an offer from a private insurer that is 15 percent higher than the Citizens rate. Under current law, the offer has to be 25 percent higher for a homeowner to qualify for Citizens.

Crist said the Senate and House proposals "give more power back to the people for them to have the opportunity for Citizens and other competition, as a result of this good legislation to be able to get lower rates."

There was one vote against the Senate bill.

State Sen. Mike Bennett (R-21), who represents parts of five counties, including Anna Maria Island, said he cast the lone dissenting vote, "not because I am necessarily against it, but because we need to spend more time on it."

Bennett said the bill banning the "pups" came up in the Senate committee meeting and committee members "tried to solve it in under three minutes…. How can I vote for it when nobody understands it?… Some of these things we rush to judgment."

He said the Florida insurance problem couldn't be solved "until you deregulate" the insurance industry. He did not indicate how much deregulation he thinks would be necessary to improve the state insurance picture.


Citizens expands Web site

While new legislation moved ahead in Tallahassee, Citizens Property Insurance Corporation launched a new Web site aimed at providing better customer service.

"We want our customers and the public to be able to go to our site and get all the information they need," declared Scott Wallace, Citizens president.

The Web site -which can be found at -shows the Citizens logo in a blue background with an image of swirling hurricane winds and the slogan: "Carrying Florida Through the Storm."

Citizens had more than 1.2 million policies in force as of March 31, representing $434 billion in exposure.

 Dozens of Anna Maria Island property owners depend on Citizens for wind coverage because they cannot find insurance on the private market. Under the new legislation approved in January, Citizens is more available than ever to homeowners and commercial property owners.

The new Web site provides answers to questions about the impact of the new insurance law on Citizens, and it offers information about eligibility, rates, refunds and coverage. One feature is a list of toll-free numbers to call for help, although Citizens urges policyholders to contact their insurance agent before trying to contact Citizens.

There is also a "Storm Watch" section on the site with information about the hurricane season, which begins June 1 and runs through Nov. 30.

The Web site urges property owners to take steps that can lower insurance premiums, including installing hurricane shutters, upgrading your roof, checking for discounts on masonry construction and other building characteristics, and reviewing your policy with your agent to see if you are eligible for any hurricane mitigation discounts.

Another section of the Web site contains tips on what to do after a storm, including how to file a claim and how to prepare for a visit by the claims adjuster.

On the Storm 2007 page of the Web site, Citizens notes that Florida is not presently under any storm restriction. The page also advises: "No application for new, or endorsement for increased coverage, may be bound, written, or issued, or monies received, regardless of effective date, when a tropical storm or hurricane watch or warning has been issued by the National Weather Service for any part of the state of Florida."

In a press release about its expanded Web site, Chelsea Garfield, Citizens' Web-content supervisor, said the Web site is "an ongoing project, so our users can expect to see continuous improvements, expanded content, and increased number of requested features."

Note: If you have an insurance story to share with others about your experience with rate hikes, rate reductions, rate refunds or other insurance issues, please send a note to The Islander by e-mailing or