Oh, the sob stories
trotted out by insurance companies after last year's
hurricanes.
They said they faced
billions in claims, and now must have higher profits to make
insuring Florida property worth the risk.
An investigation last year
by FLORIDA TODAY found their tales were full of holes, and
an updated look at the situation by the newspaper found more
of the same thing.
Among the revelations is the
state's 5 percent cap on insurance profits was within hours
of ending recently -- without any public hearings.
Consumers got a break only
because, all of a sudden, state Attorney General Charlie
Crist and Chief Financial Officer Tom Gallagher got worried
about rate hikes.
But if they're such great
consumer watchdogs, why didn't they slap down the idea when
it was proposed in March 2004 by industry bigwigs?
Or in November, when the
rule was drafted?
We figure since both are
GOP-gubernatorial hopefuls in 2006, they decided they didn't
want to face the voter heat. So once the election is over,
watch your wallet.
Meanwhile, here are some
other things FLORIDA TODAY recently uncovered:
·
Insurers' reports of massive losses were inflated with
hundreds of millions of dollars in claims that were never
made.
The companies' losses were
booked through the end of 2004, three months after the last
hurricane. And yes, some might trickle in late.
But Allstate Floridian
policyholders had not filed for 25 percent of the losses the
company claims. And non-existent claims make up a third of
the losses claimed by State Farm.
·
Florida's top insurers -- State Farm, Allstate Floridian and
Nationwide -- got almost $1 billion in federal tax subsidies
on their 2004 losses. That means taxpayers footed a third of
the bill.
Now they want even more of
your money, beyond the hefty recent premium increases
already OK'd by the state.
·
Finally, profits from years with no hurricanes and earnings
from sister companies have offset what remained of the 2004
losses.
Some companies say if they
don't get the higher rates they want, they're leaving. We
say it's time to tell them it's all or nothing.
If they want to reap the fat
rewards of Florida's auto, life and liability business, they
have to provide property insurance -- under the 5 percent
cap.
As Robert Hunter, insurance
director for the Consumer Federation of America, says, if
Florida insurers aren't making enough money, slamming policy
holders with higher rates is not the answer.
The answer is for insurers
to improve the quality of the investments -- real estate,
stocks and bonds -- where they make most of their money. And
it's better risk management.
For example, rather than
parent insurance companies isolating Florida property
insurance in separate companies, they should widen the
risk-and-premium base, wrapping together storm-prone areas
from Texas to Maine.
Assuming rates would reflect
real risk, and be arrived at openly, we agree.
Meanwhile, Floridians expect
elected officials to see through insurers' hokey tales of
woe and shut off the handouts unfairly pried out of
consumers' pockets.
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