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Experts: More Insurers Could Pull Out Of Florida

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By RUSSELL RAY

rray@tampatrib.com

Published: February 25, 2009

ORLANDO - State Farm won't be the last property insurer to pull up stakes in Florida if insurance companies aren't allowed to charge their customers higher rates, industry experts said Tuesday.

During a property insurance summit hosted by the Florida Chamber of Commerce, participants urged Florida lawmakers to reduce the state's regulatory grip on homeowner rates and find a way to fully fund Florida's Hurricane Catastrophe Fund. Without those changes, more property insurers will join State Farm on its path toward insolvency, they warned.

"Solvency means everything," said Steve Pociask, president of the American Consumer Institute's Center for Citizen Research. "Without solvency, insurance doesn't work. Without solvency, there is no reason for consumers to buy the policy."

When states pass laws designed to keep premiums "artificially" low, as Florida has, the availability of insurance inevitably declines, Pociask said.

"Insurance companies begin to leave the market and stop writing new policies," he said.

State Farm requested to raise homeowner rates 47 percent on average statewide, saying it is losing $20 million a month in Florida because its rates aren't high enough. Without a rate increase, the company said it would be insolvent by 2011.

But Ed Domansky, spokesman for Florida's Office of Insurance Regulation, said in a phone interview that if the state had allowed State Farm to raise rates the requested amount, some homeowners would have seen their premiums rise to unaffordable levels, as high as 90 percent in some parts of Florida.

"The office reviews these companies for solvency," Domansky said. "You can't have a totally free market when mortgage companies require that you have property insurance."

Domansky said his office, which rejected State Farm's request, wasn't invited to the two-day summit at Walt Disney World's Grand Floridian Resort.

Reporter Russell Ray can be reached at (813) 259-7870.

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