Insurance Commissioner Unveils Proposals To Help Businesses That Cannot Find Property Insurance
TALLAHASSEE (August 1, 2006) – Florida Insurance Commissioner Kevin McCarty today presented a draft plan to help Florida businesses that cannot find adequate insurance coverage to protect their commercial property. The Office of Insurance Regulation (Office) developed the draft plan in response to a large volume of calls from around the state asking for help obtaining commercial property insurance coverage.
In his presentation to Gov. Jeb Bush and members of the Florida Cabinet, McCarty said that under existing law the state can form an association to help provide commercial property coverage if enough businesses appeal to the state because they cannot access adequate insurance. He also presented the results of a survey the Office conducted that found widespread problems accessing insurance coverage or affording rapidly escalating premiums. The survey was a two-week, internet-response-based survey and should not be considered statistically valid.
Of the survey respondents, 42 percent were either cancelled or non-renewed by their insurer in the last six months and 32 percent were able to secure new coverage but with higher rates, less coverage or both. Some of the respondents said they may relocate their businesses to other states due to insurance difficulties.
"We had no doubt there is a burgeoning crisis in commercial insurance," said McCarty, "therefore we conducted the survey while we researched potential solutions to the problem. This would allow us to better identify the difficulties businesses are facing, what types of businesses are facing them and where they are located."
The plan makes use of a statute that was put into law in 1986 (F.S. 627.351(5)) to deal with a commercial insurance crisis at that time. It created a Joint Underwriting Association which eventually was deactivated, but the enabling statute remains on the books along with the triggering mechanisms which allow it to be reactivated.
The proposal outlines remedies ranging from the creation of a facility that would provide reinsurance to insurance carriers to enable the companies to write more business in the state to the creation of a facility which could directly write insurance policies. McCarty told the governor and Cabinet that, according to statute, such a facility would be overseen by a 13 member board that would be appointed by the Chief Financial Officer and would be financed by bonding and premiums.
Other ideas to remedy the commercial market issues were discussed, but most of them would require legislation. The Joint Underwriting Association can be done by rule.
The Cabinet voted unanimously to have the Office begin the rule making process and report back at the next meeting on August 15th.
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