Sunday, February 10, 2008
TALLAHASSEE - An unprecedented peek behind the curtain at how homeowners insurance rates are set in Florida has given state lawmakers plenty of ideas to take to bill-drafters in advance of this spring's annual legislative session.
From the way insurers are forecasting storms, to the profits they are allowed to earn, state senators vowed Tuesday to continue to tweak regulatory statutes to help provide lower premiums for homeowners.
"I don't think you're ever going to see the day again in Florida where insurance providers may assume that they can just throw something at the wall and see what the consequences are if it is not carefully thought through and justified in every detail," said Sen. Jeff Atwater, R-Palm Beach Gardens, co-chairman of the Senate Select Committee on Property Insurance Accountability.
But it's not just greater scrutiny of rate proposals that lawmakers are considering after a grueling two days of testimony at the state Capitol from regulators and executives of five of the state's major home insurers.
"What we're finding out also," Atwater said, "is if there is any more we can do legislatively that doesn't harm the creation of a vibrant marketplace, but at the same time protects consumers from an industry that is beginning to use alternative sets of information at their whim when people are already on their knees."
While car insurance is vital for drivers as it is a legal requirement, home cover is probably the second most important insurance available to consumers.
That is the opinion of Graeme Trudgill, technical and corporate affairs executive of the British Insurance Brokers' Association (Biba), who said that last year's flooding had demonstrated that around 25 per cent of homeowners did not have this sort of insurance.
He explained: "Home insurance is absolutely the second most important insurance you can buy. The first is motor insurance if you have a car because it is a legal requirement but home insurance is critical for several reasons.
"Firstly, if you have a mortgage there will be a contract between you and the mortgage provider which almost certainly says that you have to take out buildings insurance and if you don't you will be in breach of your mortgage contract."
Mr Trudgill added that all a person's "worldly goods and investments" are generally tied up in their home and that they could effectively lose everything if they do not invest in home insurance.
"Insurance premiums for buildings and contents insurance have hardly changed in the last ten years - they are very low, they are great value for money and it's really competitive out there at the moment," he concluded.