House Committee Passes Consumer Choice Legislation
March 17, 2010

On Wednesday, March 17th the Insurance, Business & Financial Affairs Policy Committee approved CS/HB 447 Relating to Residential Property Insurance by Representative Bill Proctor (R-St. Augustine). This bill will provide homeowners with the option of purchasing their homeowners’ insurance from a private insurance company using rates higher than their approved rates in lieu of the state's insurance company, Citizens. By encouraging private insurance companies and their private claims-paying capital to return or continue to do business in Florida, this bill will help to reduce the burden of “hidden hurricane taxes” on businesses insurance premiums to fund Citizens' claims paying deficits. Many businesses are shocked to learn that TODAY - in 2010 - they are STILL paying hidden hurricane taxes to cover Citizens insured losses from the 2004 and 2005 hurricanes. This bill will reduce this taxation risk on Florida's families and businesses which is a top priority for AIF.

HB 447 will now move on to the House General Government Policy Council for further consideration.

AIF believes that passage of the 2010 Consumer Choice bill is critical for Florida’s future for several reasons:

• First and foremost, this bill will help to provide consumers with more choices and more options for purchasing their homeowners’ insurance from a private insurance company.
• This is something we know consumers want and need – in fact, a Florida survey  conducted last spring found that 62 percent of Florida voters supported the 2009 Consumer Choice bill and wanted it to become law.
• Additionally, by encouraging private insurance companies and their private claims-paying capital to return to Florida, this bill will help to reduce the burden of “hidden hurricane taxes” that most Floridians are unknowingly paying today on their home, auto, boat and business policies.

As Representative Proctor and other bill supporters know all too well, state government has taken on billions of dollars of property insurance risk that it can’t pay for – one bad hurricane, and there’s a real threat homeowners won’t get their claims paid and Florida could literally face bankruptcy.  Today, the only real choices that most consumers have when shopping for homeowners insurance is to go with state-run Citizens or a new start-up insurer that they have never heard of.  We have all seen the recent news headlines that raise alarming questions about the financial condition of some of these start-up companies and raise serious doubts about their ability to survive a hurricane.

AIF is satisfied that the 2010 Consumer Choice bill has strong consumer protections and disclosures – including mandatory rate comparisons between Citizens and the private insurer offering the Consumer Choice policy.  Consumers must sign an acknowledgement stating that they know they are buying a Consumer Choice policy, and that they want to buy one.  Consumers are smart. They comparison shop. They should be allowed to decide for themselves – rather than having the state decide for them – what they are willing to pay for the peace of mind of insuring their home.  It’s time to give the consumers of Florida more choices in property insurance.

AIF SUPPORTS legislation which makes competition the primary determinant of insurance rates, including consumer choice for homeowners, flex rating for insurers and exemption from OIR prior approval of rates for certain commercial policies.