NU Online News Service, Feb. 25, 12:05 p.m. EST

A bill, with language supplied by an insurance trade group, to deregulate insurance rates for some commercial lines excluding those exposed to catastrophic risk, has been introduced in the Florida Senate.

The American Insurance Association (AIA), which helped draft the measure, SB 2176, said the bill, has been sponsored by Sen. Durrell Peaden, R-Crestview.

According to its text, the legislation would exempt "specified types of insurance and commercial lines risks from certain requirements of state law relating to the filing and review of rates."

AIA noted that the bill only includes rates, not the related forms. The association added, "We're not aiming at all commercial coverages – notably, property is excluded – but included are categories that are competitive, unique, or involve sophisticated insureds."

AIA said the commercial lines covered under the bill would be:

oExcess or umbrella.

oSurety and fidelity.

oBoiler and machinery.

oCommercial motor vehicle.

oErrors and Omissions,

oProfessional liability (except med mal).

oDirectors and officers.

oIntellectual property.

oEnvironmental liability.

oRisks with annual premium of $25,000 or more, excluding property.

In making its case for the legislation, AIA said that although the Florida commercial market is healthy, there is a recent trend where Florida regulators are "applying strict control over commercial rates" and delaying filing approvals.

Cecil Pearce, AIA vice president, said, "Some of the [regulatory] culture in Florida on the homeowners side has shifted to the commercial side."

Mr. Pearce said after the 2004 and 2005 hurricane seasons, Florida saw a lot of "legislative reaction," where the goal was to try and have government fix the homeowners market. Now, he said, there is a "growing sense" that legislators realize the government fix is not going to work. The discussion has shifted, he noted, to how insurance capital can be brought into the state.

There is also a drive, he said, to get the state's economy going again, as unemployment is over 10 percent. Attracting insurance capital on the business side, Mr. Pearce said, will help businesses in the state grow.

To that end, AIA said it has lined up support from the Associated Industries of Florida, a large business association in the state.

Mr. Pearce said the proposal is "nothing radical," and opens up only commercial lines that have healthy competition, are not impacted by catastrophes, and have "products the business community needs to grow."

During the last legislative session, the Florida legislature passed a bill deregulating rates for some homeowners insurance carriers, but the measure was vetoed by Gov. Charlie Crist.

Mr. Pearce said the buyers for the lines in AIA's proposed bill would be risk managers for businesses, rather than homeowners, and so the same concerns may not arise.

But he noted that it is an election year, and the legislature already has to cut another $3 billion out of the state budget, and so he expects there to be caution about any new idea such as deregulating some commercial lines. He said he hopes the bill goes through in the current legislative session, but acknowledged it may take a couple of years to get it approved.

Mr. Pearce said AIA is meeting with the state's Office of Insurance Regulation (OIR) on Monday to discuss the bill.

Brittany Benner, deputy director of communications at the OIR, said the OIR is aware of SB 2176, but is still reviewing it and therefore had no comment yet.

Florida Insurance Commissioner Kevin McCarty opposed the bill deregulating rates for select homeowners insurers.

Special Reports /

AIA Pushes Fla. Commercial Insurance Deregulation Bill

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