WASHINGTON–Insurance industry trade groups are taking strong offense to pre-holiday remarks by Florida Gov. Charles Crist that the industry is "breaking its promises" to cut homeowners' insurance rates to Florida residents.
Comments by Property Casualty Insurers Association of America (PCI) and the National Association of Mutual Insurance Companies (NAMIC) are in reaction to remarks made by Gov. Crist, published by the South Florida Sun-Sentinel on July 3.
Gov. Crist contended that the industry is "asking the state to assume more risk on its behalf" in the wake of sweeping legislative action by the governor and state legislature earlier this year, designed to lower soaring rates for coastal residents prompted by the growing number and strength of hurricanes in the region.
In a categorical denunciation of Gov. Crist's comments, William Stander, assistant vice president and regional manager for PCI, said, "To be clear, the 24 percent rate reduction was never a promise made by the insurance industry.
"This was an estimate from state officials and regulators who failed to realistically portray the reductions consumers could expect," he added.
Liz Reynolds, southeast state affairs manager for NAMIC, voiced an even stronger statement. "The comments attributed to Gov. Crist are inflammatory, inaccurate and misleading," she said, adding that his remarks "serve only to confuse constituents concerned about the likelihood of another severe storm season."
Ms. Reynolds said the governor's opinion that he "…hopes those rate increases are rejected" and intimations that he may take administrative actions to "hold the industry's feet to the fire" suggest he either fails to understand or is ignoring the need for risk-based pricing to maintain a healthy, viable, private insurance market in Florida.
"Despite the governor's wishes that by expanding the state-run Citizens Insurance a competitive market will ensue and insurance rates will magically go down, that is not how the insurance system works," she said. "A true competitor is not propped up by the government."
She noted: "Further, mixing government with the private sector in this scenario does not work. The private market can insure Florida's homeowners without 'competition' from the government."
She emphasized that "rather than lowering rates, this type of competition will only serve to force many private insurers out of the marketplace and leave Florida's taxpayers holding the bag when the next storm hits."
Ms. Reynolds and Mr. Stander both reiterated that the insurance industry did not request that Gov. Crist or the state of Florida take on more of a role in the insurance market or assume an increased level of risk.
"In fact, this decision was made against our recommendations and is seen as a flaw in the current system," Mr. Stander said. "The only way for the insurance market to work for the homeowners of Florida is to allow the private market to compete on a fair and level playing field."
He insisted that increasing Citizens Property Insurance Corp. and "recklessly forcing more risk upon the state was never advocated for by the insurance industry. From the beginning, we warned that the legislative package rushed through in January's week-long special session would have unintended consequences and would negatively impact the state and homeowners."
Mr. Stander added that the insurance industry in Florida "takes its promises seriously."
That is why "we have repeatedly called for a comprehensive insurance solution that not only addresses consumers' demands for affordable rates but also focuses on the long-term stability and solvency of the insurance market in Florida.
He said that insurers have a responsibility to "ensure that the industry is stable and can pay its claims when a storm strikes Florida."
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