PIP Works for Consumers

The Florida Legislature is considering bills to “reform” Personal Injury Protection (PIP) which is part of your auto insurance. Florida is a “no fault” state, so everybody has $10,000 of PIP coverage, and there’s no questions:  if you’re injured, PIP pays.

This article is to give you some of the basics, next time, I’ll get into more detail on specific proposals.

Unfortunately, there is some PIP fraud in Florida, but we don’t know how much. FCAN published a study by Dr. Lore Medders of FSU looking at the numbers, and that’s what she said. There may be rings of criminals staging accidents in cahoots with clinics just to collect as many PIP payouts as possible. However much fraud there is, everyone would be better off with less fraud.

PIP is an important safety net for consumers in ways you may not realize. PIP is sometimes the only insurance a driver has for injuries, because health insurance is expensive. PIP dollars help keep hospital trauma centers going and help make sure doctors and hospitals get paid.

$10,000 isn’t much in today’s expensive medical world, but it makes a big difference.  Why change something that works?

Fraud is a problem because law enforcement is usually more focused on violent crimes and does not have the resources to focus on complex white collar crimes. Insurance companies don’t like to harass their customers with investigations, so they often just pay.

FCAN belongs to the Coalition Against Insurance Fraud and works with insurers and law enforcement against fraud. One thing we’ve heard again and again is that the most effective tool against fraud is dedicated fraud prosecutors and law enforcement units. That costs money.

The Legislature funded prosecutors in Miami, Tampa, and Orlando and it works, but we need more prosecutors. The Legislature is pledged not to raise taxes, even if more prosecutors would save consumers money. Taxes, you know, they’re not popular these days.

So, that leaves insurers and consumers to pay for the prosecutors, and that would mean higher auto insurance rates, maybe. I say maybe, because if they drive down fraud enough, we’ll actually save money!

Naturally, the Legislature believes trial lawyers are the problem.  And chiropractors and maybe even some other medical providers. The Legislature always thinks lawyers are the problem, mainly for political reasons. They want to limit their fees, meaning you won’t be able to get a lawyer to take your case because they can make more money elsewhere. That’s the market at work. But while this may increase insurer profits, there’s no evidence it would stop fraud, and it also leaves consumers without medical care when they need it. It means hospitals would get stuck with more bills that don’t get paid.

It is true that some lawyers, some chiros, and even some other providers, I could mention massage therapists, are taking advantage of the system.  If they’re committing fraud, they should be prosecuted. But most of these professions serve consumers, and help us deal with sometimes very difficult problems.

The Legislature sometimes just throws up its hands, saying, “The heck with this, let’s just get rid of PIP.”  Then people with no health insurance might not get medical treatment after an accident or the health care providers who treat them may not get paid.

Florida’s Chief Financial Officer Jeff Atwater, recently said that more prosecutors were the best way to fight fraud. He’s right. We can’t just ignore this crime because it’s hard to fight and let consumers pay the bill. The Legislature has to find a way to pay for the law enforcement that’s needed. In the end, it will pay off. Fraudsters will need to find another state.

Write your state senator or representative and demand more fraud prosecutors. Don’t let the criminals win. Let’s have real justice, not just political vendettas. Do your job, legislators! Protect consumers and run the crooks out of the state!

Myths vs Facts on Event Ticket Selling

FCAN today issued a press release supporting legislation to allow consumers to control tickets to concerts or sports events that they buy.  Ticket sellers like Ticketmaster may soon offer only electronic tickets, meaning that you can’t resell your ticket or even give it to a friend.  You’ll be required to show picture ID to use the ticket and get into the event.

We believe that you, the consumer, own your ticket and should be able to give it away or resell it. It’s yours. You put down your money. You can sell it online or you can buy a ticket at an online auction. There’s a market for tickets, and sometimes you pay less, sometimes more.

The Fan Freedom Project, which is promoting this legislation, follows the work of groups like Radiohead and Pearl Jam, which have fought against the ticket monopolies.

Here is part of the press release:

“This legislation simply ensures that consumers who purchase a ticket to an event will have ownership of that ticket and ensures choice in the ticket market,” said Bill Newton, executive director of FCAN. “There is a lot of misinformation surrounding this legislation, and it is important that Florida consumers know the facts.”

FACTS ABOUT HB 225 AND SB 392:

HB 225 & SB 392 PROTECT A COMPETITIVE, TRANSPARENT AND FREE MARKET: HB 225 and SB 392 will ensure that consumers have the right to sell or transfer their ticket any way they choose, to anyone they choose, at any price they choose. This is the essence of a well-functioning free market.

HB 225 & SB 392 PROTECT BASIC RIGHTS OF FANS: We have all given tickets away to friends and family, or sold tickets to colleagues when forced to back out of a game or concert. HB 225 and 392 protect these basic freedoms that we have all enjoyed.

HB 225 & SB 392 CURB PREDATORY PRACTICES OF THE TICKET INDUSTRY:

HB 225 and SB 392 ensure that teams, venues or companies like Ticketmaster cannot employ restrictive technologies (like restrictive paperless tickets) that lock valid ticketholders out of events.

MYTHS ABOUT HB 225 AND SB 392:

HB 225 & SB 392 REMOVE PROTECTIONS FOR NONPROFIT VENUES: This is false. HB 225 and SB 392 will uphold the current law that holds secondary ticket sellers responsible for refunding the tickets they have sold on the secondary market. The original ticket seller will not be held responsible for refunding tickets purchased on the secondary market.

HB 225 & SB 392 GIVE SCALPERS UNLIMITED ACCESS TO TICKETS: This is false. HB 225 and SB 392 will not affect in any way how a venue can choose to restrict the number of tickets that a customer can purchase.

HB 225 & SB 392 HURT CONSUMERS: This is false. HB 225 and SB 392 will HELP consumers by ensuring their right to transfer tickets and recoup losses if they cannot attend an event.

Debt Settlement battle at the Florida Legislature

You have seen the ads late at night on TV - "have lots of debt; call this number and we will take care of all your debt by getting your debt reduced." Currently Florida law provides for a very reasonable fee for debt settlement services like this. But the national debt settlement industry would like to be able to charge much higher fees in Florida. The industry needs higher fees, paid as soon as they can get them, since most consumers are unable to meet the payments on their debt and the high fees, so after a few months of high fees and paying on their debts, they are unable to continue. Consumers end up worse off than they were before. The FTC recently passed new regulations to try to control this industry since nationally their have been so many complaints. SB 336 and HB 67 have been filed for the 2012 Florida legislative session. These bills should not pass. SB 336 will be heard in Florida Senate Banking and Insurance on Wednesday, December 7. Let your state legislators know you oppose these bills.

FCAN, FNM, ON, Rainbow Push, Humanists, Veterans demand City of Tampa support for Occupy protestors

[This letter was delivered to the Tampa City Council on Nov. 3, 2011 and signed by Organize Now, Florida New Majority, Rainbow Push, Tampa Humanists, Veterans for Peace, and FCAN.]

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November 3, 2011

Tampa City Council Members

We, the undersigned organizations, representing thousands of city residents, request that the City of Tampa, after consideration of the Constitution of the United States, especially the First Amendment, which recognizes free speech and spells out the “right peaceably to assemble, and to petition the Government for a redress of grievances,” officially recognize the following facts:

• The Occupy Tampa movement, in solidarity with other Occupy groups including Occupy Wall Street and Occupy Oakland, is citizens of Tampa using their First Amendment rights to protest and seek redress of grievances. The means of expression is to peaceably occupy publicly owned land 24 hours a day 7 days a week, for instance, holding a constant vigil at Curtis Hixon Park.
• The park is public property where the rights of citizens to peaceably assemble, and to petition the Government for a redress of grievances is protected 24 hours a day, 7 days a week by the Constitution and should also be protected by the City of Tampa.
• The Constitution and the rights of protesters supersede any and all City of Tampa ordinances as long as the protest is peaceable, and does not endanger public safety. The Occupy Tampa protest has been peaceable and endangers no one.

We request that the City take the following actions:

• The Tampa Police Department should protect the rights of the protestors and ensure their safety. The police should not interfere in the exercise of constitutional rights in any way. The police should not arrest peaceful protesters on public property, attempt to control the protestors, awaken the protestors (sleeping in the park is an integral part of the protest) and avoid taking any position on what is or is not an expression of free speech.
• The City of Tampa should provide needed services for the citizens exercising their 1^st Amendment Rights at Curtis Hixon Park by providing sanitation (Porta-potties), electricity, trash removal, potable water, and other city services as needed.

In this way, the City protects and serves its Citizens as they exercise their rights, freely express their opinions, and seek redress of grievances. These actions would place the City in a neutral position rather than one of opposing the protestors or intentionally making their occupation uncomfortable or difficult.

Respectfully,

Florida Consumer Action Network
Rainbow Push Coalition
Organize Now
Florida New Majority
Veterans For Peace
Tampa Humanist Association

Who has the money, and who pays taxes?

We’re constantly hearing that “50% of Americans don’t pay any income tax.”  You just know that it isn’t true, and you know that everyone pays sales taxes and most everyone has payroll taxes deducted. But still, it sticks there.

It isn’t true, except for one year, 2009, after the recession hit. That was a very tough year, so it’s no surprise that the number of people exempt from income tax because of low income went way up. The info is from the Center on Budget and Policy Priorities’ report, Misconceptions and Realities About Who Pays Taxes. 

CBPP points out that there were also some special tax credits that year that pushed the number even higher. According to CBPP, “In a more typical year, 35% to 40%” owe no taxes.  And federal gas taxes aren’t counted.

According to a study by the Institute on Taxation and Economic Policy, “the bottom fifth of households paid 16.3% of their incomes in taxes, on average, in 2010.  The second fifth paid 20.7%.” 

Here’s how the recession affected taxpayers:

Who Has All the Money?

No doubt, the top fifth almost have it all.  According to a PBS report in 2011, the top fifth now holds 84% of US wealth.  That’s not a typo, 84%.  The next fifth has 11%, the middle fifth 4%, the next fifth has 0.2% and the bottom fifth has 0.1%.   And, surprise, it is becoming more uneven all the time.

“Wealth” is assets minus liabilities, or things like land, stock, bonds, houses, and factories.  It is not the same as income, which is the number usually used by the right-wingers when complaining about taxes.  So, a look at income.

Doesn’t look good, does it. What it says, in plain terms, is that the rich get richer and the poor stay poor. And the middle class stays poor too.

In 1915, the Robber Baron days, the top 1% got 18% of the income.  Today, they get 24%.  For comparison however, I use quintiles, and offer the following from the US Census for 2010.

The lowdown?  The top fifth gets 50.2% of the income, and the next fifth gets 23.4%.  Income in the fourth quintile was from $61,736 to $100,065 and the top fifth was everyone above that. For the record, the third quintile is $38,044 to $61,735, the second, $20,001 to $38,043. One fifth of us had incomes of $20,000 or less in 2010.

The top fifth paid 64.3% of federal, state, and local taxes out of their 50.2% of the income.  Doesn’t sound like a big price to pay.

I hope that answers some questions.

Good jobs for everyone in America

Today, too many Americans can’t find a job, and too many jobs pay wages that don’t support a family. Our families are working harder and getting paid less, falling behind our parents' generation. While our wages are stuck in place, the super-rich are getting even richer.  And CEO campaign contributors are buying tax breaks from politicians to ship our jobs overseas, while their corporations cut our wages and benefits at home.

Look, the people who wrecked our economy should be paying for it, not profiting from it. Deregulating Wall Street and trickle-down tax cuts for the rich didn’t create jobs. Workers who get decent wages and benefits, who can support their families, who shop on Main Street – that’s who create jobs. It’s simple really: Our economy works better when every American who wants a job is working.

We can create good jobs for everyone in America, now! There is more than enough vital work to be done and Americans stand ready and eager to do it. We can rebuild our crumbling bridges and repair out-dated schools, so that our businesses will be able to get their goods to market and have an educated workforce. We can change the rules so that American manufacturers can compete fairly with China. We can keep America competitive in the 21^st Century.

We can build strong communities. We can put teachers and firefighters back to work. We can help keep our families secure, by protecting Medicare, Medicaid and Social Security. We can make sure that losing you job doesn’t mean losing your home. And we can pay for this by ending giveaways to Big Oil, taxing Wall Street speculation and by raising taxes on millionaires instead of giving them more tax breaks. After all, big corporations are sitting on $2 trillion in cash while laying off workers. If they won’t put Americans back to work, we will!

The choice today is crystal clear. We stand with working families and the small businesses that create two-thirds of American jobs. They stand with the Wall Street speculators and CEOs who cut our wages, crashed our economy and shipped our jobs overseas. The question we have to ask every member of Congress is: which side are you on?

Underwhelmed by Sinkhole Decision

Florida Insurance Commissioner Kevin McCarty is being congratulated for limiting Citizens to an under 50% increase in sinkhole rates. Citizens had asked for a 4,000% rate increase.  It was clear that the Citizens hike wasn’t going to stick, and you had to wonder why they even did it.

No doubt the free-marketers on the Citizens board, under pressure from industry lobbyists, legislators, and the Governor’s office, decided they needed to dramatically raise rates to push customers into private companies. They couldn’t just serve their customers and try to do a good job, could they?

Once the decision was made to serve the private companies instead of consumers, the groundwork was laid for a very bad decision indeed. Why would anyone think it is a good decision to raise rates 4,000 percent when people are getting slammed by the worst recession in memory?  Pasco and Hernando are already very hard hit with empty developments and no jobs.  Foreclosure rates are soaring.

The response from those fronting for industry was that only 20% of people there actually had the coverage. So, I guess, the heck with them, right?  Guess not.  It turns out a lot of people were upset and they made a lot of noise.

What to do? What to do? Nobody in Tallahassee knows more about insurance that Commissioner Kevin McCarty, soon to be President of the NAIC.  It was predictable that they would ask McCarty to find a way out, and he did. The rate increase request was so full of holes, they had no justification at all for the numbers.

Citizens needs board members that don’t try to destroy the company with complete disregard for their customers. McCarty won’t always be able to bail them out. We need some competent people in there.

Sadly, it remains the policy of the Governor to close down Citizens and he appoints board members who agree. He wouldn’t do that with a company he owned. He’s put the best product, at the best price on the market and make some happy customers. That’s what Scott should do for Citizens.

FCAN applies for intervener status in Duke-Progress merger case

FCAN today joined with allies in North Carolina led by NC-WARN to oppose the Duke-Progress merger.  FCAN believes the merger is bad for consumers for several reasons.  The merger means more pollution, higher rates, and no benefits for consumers.

The groups are demanding the following from Duke-Progress:

1. Develop an energy efficiency first policy instead of relying on nukes and coal fired plants.

2. Commit to an Energy Efficiency Portfolio Standard of 22% energy savings by 2025 for all residential, commercial and industrial customers.

3. Implement energy efficiency “best practices” across the merged Duke Energy operating companies.

4. Fund programs to help families who cannot afford energy efficiency, ranging from weatherization and insulation to appliances and HVAC systems.

Included in the coalition are

NC WARN

Nuclear Information and Resource Service

Public Citizen

Greenpeace USA

Florida Consumer Action Network

NC Justice Center

NC Housing Coalition

If you’d like to get involved, write to the

North Carolina Utilities Commission
DOCKET NO. E-2 Sub 998
4325 Mail Service Center
Raleigh, NC  27699-4325

Florida consumers have a lot to lose in this case.  We think the companies want to merge simply because Florida has a Super CWIP law, and North Carolina doesn’t. CWIP is Construction Work In Progress, and utilities aren’t allowed to bill consumers for it because it gives the utility a direct line into the consumer’s pocketbook.

But in Florida, the Legislature approved Advanced Nuclear Cost Recovery, which is known elsewhere as Super CWIP.  That’s because the utility can bill consumers for CWIP which ISN’T even in progress and, apparently, for plants that may never be built.

The utilities should find financing in the marketplace, but no investor would fund such a risky speculative venture. So the Florida Legislature stepped in and helped them out, since Progress, TECO, and FP&L are among their top contributors.

That means that while Duke can’t build the nukes it wants up in North Carolina, it can build them here.  In effect, Florida would become a nuclear donor state.

Read the petition to intervene here.

The 2011 Legislature

Tallahassee 2011 was a one-sided battle between powerful corporate interests and public interest groups like FCAN, FPIRG, environmentalists, women, labor, and more. None of us could match the campaign money and the army of lobbyists representing big agriculture, theme parks, insurance companies, utilities, and all the rest. 

Represented by the Chamber of Commerce, Associated Industries, and various trade groups, the corporados swarmed and took what they believe is rightfully theirs :  tax breaks, growth management laws, voting rights, state worker pensions, school money, abortion rights, and more.

The only real drama came when corporations fought corporations, or corporations fought Republican ideology. For instance, the Tea Parties insisted on immigration laws, including use of the Federal E-Verify system. This caused agriculture, in particular, but many other businesses as well, to dread doing without the big profits they make from cheap immigrant labor.

So Sen. JD Alexander, the snarky owner of Alico farms, and a wealthy descendant of Ben Hill Griffin, made a show of caring about his workers, and stopped the bill. If he really cared about his workers he would be fighting for the DREAM act so they could become citizens.

Insurance

The insurance companies, savoring the opportunities of a veto proof Republican majority in the House and the Senate, went after everything that they could think of.  FCAN and others bravely fought back, but I cannot tell you that we could match their lobbyists or pubic relations firms. However, we did exploit their one weakness:  Legislators were afraid to raise rates during a difficult economy.

That proved to be the proper lever, and bills to raise Citizens’ rates by 50%, eliminate sinkhole coverage, and cut mitigation discounts fell by the wayside. It was easier for legislators to risk the 1% chance of a huge storm than to face voters with insurance bills and corporate profit reports in hand.

Voting Rights

Fear did not stop the Legislature from curtailing early voting and voter registration. I’m sure they feel such technical changes are lost on most Floridians and many will never know they’ve been disenfranchised until it’s too late. We’re going to take them on though, with big voter registration drives and GOTV plans. FCAN and its allies have always relished the opportunity to hold legislators accountable at the ballot box. We will not be stopped.

While it seems that our battle against the powers that run Florida is unlikely, and we are not winning at the moment, things do change. Ideas can carry the day. People can understand what is being done in their name and take action. We will stretch our resources as far as needed. We believe that we must fight for our values, no matter the odds, regardless of the strength of our opponents. To do otherwise would be to abandon our democracy and give up control to corporations, who are not people.

If you want to help, find the donate button and pitch in whatever you can. We’ll put it to work.

Trial lawyers are consumer’s friends

In today’s Buzz, Mark Caputo writes, “Trial lawyers get a whacking in Florida Legislature.” FCAN works with the trial lawyers in the Florida Justice Association, because they are on our side against insurance companies and on other issues. The FJA holds a seat on FCAN’s Board of Directors.

According to Caputo, the current issues are giving “sovereign immunity” to doctors at state universities who work at public hospitals, like Tampa General, regulation of expert witnesses, and auto crash worthiness. Why do these issues matter to consumers?

If your doctor at Tampa General or Jackson Memorial is negligent and hurts you, now you can’t sue. You can try to ask the Legislature to pass a bill to give you some money, but good luck. Why should these docs be able to hurt consumers and walk away?

Then, who pays for your health care if you’re injured?  Often these lawsuits are for people who are left paralyzed or need some kind of treatment for life. Without a settlement to pay medical bills, they are going to rely on the taxpayers, instead of the person that did the damage. How is that fair? Do you have to let the same doctor at the same public hospital work on you again?

The expert witness legislation in H 479 will make it harder for you to get an expert to testify. Your witness may have to be certified by the Department of Health and could be harassed with complaints and subject to disciplinary action.  That’s not because there’s a problem, but to intimidate witnesses.

The auto crashworthiness legislation reduces the liability of auto manufacturers for building unsafe cars.  Currently, you separately sue the driver and the car manufacturer for their wrongdoing, if any. Now, they must be combined, so each will only be held partly responsible.

The big picture is that consumers need trial lawyers when we fight big corporations. Corporations have all the advantages, especially teams of highly paid lawyers who specialize in defeating consumers.  When you have to take them on, you are at a disadvantage. Because your lawyer can take your case contingent on receiving part of the settlement, you have a way to get to court.  Court cases can be very expensive, so the trial lawyer could invest hundreds of thousands of dollars in your case, and may get nothing back at all.  Juries today are notoriously stingy and suspicious.

Then there’s politics. Republicans are attacking lawyers because they often support Democrats and groups like FCAN. Lawyers and unions are two of the biggest supporters of Democrats, so if Republicans take them down, they take their opponent’s resources, a huge advantage.

However, the lawyers are a clever and resourceful opponent. I have seen insurance companies try to take them on in Tallahassee year after year and end up scratching their heads, wondering where all their money went.

So, trial lawyers:  keep fighting for us, and keep fighting!

And then there was one

Yes, folks, there is only one, S. 408 – the Sinkhole Bill. That’s the only property insurance bill that survives after the deadline for committees to meet. At this point, a bill would have to be amended on to something else to be passed, and that would need to happen in both houses.

We are down to the “horse trading” section of the legislative Session. That’s where powerful people, like the Senate President or the House Speaker, want something really badly, and they’re willing to give something up to get it. That’s Florida politics.

There could be several reasons for this unexpected outcome, if it holds.  Legislators were more focused on political work such as disenfranchising voters and packing the Supreme Court, rather than insurance. The budget is a huge problem consuming many hours. It is possible legislators plan to raise even more money from insurance interests ahead of next year’s elections.

S. 408 is still pretty bad. It takes rights away from consumers. For instance, we would be limited to three years to file claims instead of five.  It reduces our benefits – your “replacement cost” policy will only pay in full if you spend the funds to replace and present those to the insurance company.  Of course, you probably can’t or won’t do that, so your payout will be “actual loss” instead. Oh, you will still be able to buy a “true replacement value” policy that works like the one you have now, but, surprise, it will cost more.

Call Senator Jack Latvala and Senator Dennis Jones and tell them to fix S. 408. Ask them to vote “YES” on floor amendment 497744 by Senator Fasano to deal with replacement cost value and amendment 415180 by Senator Smith on time to file claims.

The current bill does one good thing – it extends “file and use” ratemaking. That means insurers have to get approval from OIR before raising your rates.

On sinkholes, insurers will have to offer coverage for complete collapse, but nothing else. Citizens will be required to offer sinkhole coverage. The effect would be to pile even more policies into Citizens, which I did not think was a goal of the legislature.  But insurers don’t want to offer that coverage and people have to get it somewhere.

Finally, the bill changes the name of Citizens Property Insurance Company to Taxpayer Funded Property Insurance Company. Now, I don’t think this new name accurately states the situation. It’s just a dig by legislators. And, in fact, Citizens has been making money since there have been no hurricanes for five years. It hasn’t made enough money, but if there are no storms it will continue to make money.  It only become taxpayer funded if there’s a really big storm and it has to assess everyone.  So, should it be named the “Possibly Taxpayer Funded, But Probably Not, Property Insurance Company (With Lower Rates)”?

Analysis of S 408, one of the insurance bills currently in the Legislature

It’s a busy, busy year for insurance in Tallahassee.  Insurance company lobbyists are keeping legislators running to keep up with their wish lists.  Below is an analysis of one of the most prominent bills, S 408 (pdf). Another bill (S 1330) would raise Citizens' rates 25% and allow insurance companies to take your policy out of Citizens and charge you another 24.9%.

S 408 is return of last year’s major insurance bill, and nominally relates to sinkholes, but does much more. It is currently to be heard on the floor of the Senate and there are many amendments.  The House version (H 803) passed out of Insurance & Banking, and has two other committee stops.  Here’s what S 408 would do:

• Requires insurers to have $15 million in surplus funds to pay claims, up from $5 million;
• Reduces the insurer’s written notice of nonrenewal, cancellation, or termination to 90 days;
  
• Modifies replacement cost coverage so you only get “actual cash value” and get the replacement value when you produce receipts. You could still get the full replacement value policy you have today, but it will cost more.
  
• Requires windstorm and hurricane property insurance claims to be brought within three years and sinkhole loss claims to be brought within two years;
  
• Mitigation discounts are still in the bill, but watch out for amendments;
  
• Repeals the requirement that the Consumer Advocate prepare an annual report card for personal residential property insurers;
  
• Limits your ability to hire a public adjuster to help with your claim. Apparently, Citizens customers will still be allowed to use one.
• Insurers will not have to offer sinkhole coverage and probably won’t. But another bill (S 1330) requires Citizens to offer the coverage. That means a lot more policies in Citizens, but legislators said they wanted to do just the opposite. ???
• Revises what constitutes a sinkhole loss to make it much harder to collect.  This part is probably actually needed;
  
• Limits the authority of the Office of Insurance Regulation (OIR) to disapprove rates for sinkhole insurance, but they’re probably not going to offer it anyway, and if they do, the price will be sky high. Too bad for anyone living in Pasco or Hernando.
  

There’s a lot here and that’s only one bill. There’s lots of drama too, as amendments put things like “file and use” back in the bill. Just like last year, this is mostly a gift basket for insurers and FCAN opposes the bill.

Citizens

By Tom Zucco - FCAN Board member

Just a few years ago thousands of Florida homeowners jumped in cars and buses and made the journey to Tallahassee to express their outrage over soaring property insurance rates in the wake of the 2004-05 hurricane season. Their efforts led the the passage of HB 1A, which effectively reined in rates both in the private market and at Citizens.

The new law also had a downside. It signaled a mass exodus by the private market, which claimed it needed more money to do business here. That forced even more homeowners into Citizens, which now has about 1.3 million policyholders.

It looks like we may need to pay a call on Tallahassee again. This time, the Legislature is planning to force homeowners out of Citizens or dramatically raise the rates of those who stay.

So far, this has been a one-sided discussion. The insurance industry donated more than $7 million to lawmakers last year, and their wallets are open again this year. Citizens, however, is a state-run insurer and donates nothing. So already the deck is stacked.

What the private market wants is Citizens book of business, which represents hundreds of millions of dollars in premiums. But only if the price is right - which means forcing a 50-percent rate hike on Citizens' customers.

Here's an unspoken truth: This is a case where the state is actually doing something reasonably well. Citizens has flaws, but it's working. And most importantly, it's allowing people to remain in their homes.

But since Citizens doesn't write checks to politicans, all that is going to change.

Think of Citizens this way. The reason it was created, and the reason it still exists, is because the private market refuses to insure most of the areas along the coast. And I'm not talking about only the million-dollar homes on the water. Those are usually insured by a company like Chubb or Lloyds, and at a five-figure yearly premium.

I'm talking about the vast majority of homes in places like Miami-Dade, Monroe and Broward counties, homes in the $75,000 to $250,000 range. Pinellas County is a prime example. Citizens is the only company that writes affordable new policies in the county, yet 75 percent of the homes in Pinellas are valued under $250,000.

And those homeowners can look forward to a 50-percent rate hike?

Right now, Citizens policyholders are paying competitive rates that are well above the national average. Imagine what will happen when a yearly $3,000 insurance premium goes up to $4,500 a year?

And that's the key point. Property insurance is not a discretionary purchase like a new TV or a boat. We have to have it. It's a condition of a mortgage, and more than 5 million Florida homeowners have mortgages.

But we also have to have homeowners policies that will allow us to keep our homes. We had such policies before 2004. But then we were hit by eight hurricanes in two years, and instead of spreading the risk across the state and the country, the insurance companies isolated and eliminated the risk.

They left us with Citizens.

And now they want that, too.

To be sure, this is not about punishing private insurance companies. We all want to see them do well and make a profit. This is about spreading risk and keeping rates affordable in a state where the risk is enormous.

If the private market wants to be a partner, come on board. But if the State Farms and Allstates and

Nationwides are unwilling to do that, let Citizens do the job it was intended to do. It already insures the lion's share of the state's risk.

Remember one last thing.

The odds of a major hurricane (category 3 or higher) making a direct hit on Florida is about 4 percent a year. In all the years when there is no major damage (we're in our 5th non-hurricane year now) Citizens should be allowed to stockpile its reserves so it has the cash on hand to pay its bills when a big storm hits. The company was set up to do just that - and with complete transparency.

And the more policyholders that are in Citizens, the more risk is spread and the greater chance for those reserves to grow. It's a formula for success.

But the insurance lobby and the lawmakers they fund don't want that.

It's time to let them know what's at stake. Send an e-mail, write a letter or make a phone call to your legislator and ask them not to force us out of our homes.

Bruce Douglas, the retired chairman of Citizens, knew that the company had to raise rates. But he instituted a glide path. No more than 10-percent a year.

That made sense.
This doesn't.

TOM ZUCCO
Member, FCAN State Board of Directors

Destroying Citizens

Senate Bill 1714  was introduced by Sen. Alan Hays (R Umatilla) whose name you probably recognize from hearing about his other bills. The goal of SB 1714 is the destruction of Citizens Property Insurance Company because Senator Hays and many others in the Legislature believe in the “free market” which means Floridians must pay whatever insurance companies demand, no matter the consequences.

But it is not solely on the basis of ideology that Hays and others pursue their goals.  Insurance interests contributed over $7 million to the legislature in 2010. And let’s not forget that insurance companies are making lots of money using discredited “black box” models.

Let’s look at some of the provisions of SB 1714 and gauge the impact.  Citizens is now limited to 10% rate increase per year, something we call the “glide path” to actuarially sound rates. SB 1714 would not only allow 25% rate increases, but would actually prohibit rate decreases. How many of us can afford that additional money each month? How will this affect businesses where those funds would have been spent? How many jobs will be lost?

The bill would prohibit Citizens customers from hiring a public adjuster to help them with their claim. That means you would have no choice but to accept Citizens assessment of your claim, although it is unclear if your contractor could also adjust the claim. I suppose you could always sue Citizens if you’re unhappy with what they’re paying you.

There’s more. The Legislature intends to try to force more people into Citizens by changing the eligibility requirement from 15% to 25%. That means you won’t be able to buy Citizens less expensive coverage unless it is more than 25% less than the private market. You can add that to your 25% increase from Citizens.

Another provision limits Citizens ability to insure homes valued over $500,000. Now, you might think that there’s no reason Citizens should be insuring them, but wait a minute. Those are the best customers because high value homes are newer and safer, and they buy more coverage. That helps lower the cost for everyone else in Citizens. But the insurers want these lucrative customers back. I was surprised they ever let them go.

What you will see if this bill becomes law, is rate increases of 50% if you are in Citizens and a private company decides it wants you; 25% if you manage to stay in Citizens. But if you stay, good luck with your claim, although Citizens claims service has actually been pretty good.

SB 1714 also removes “bad faith” liability from Citizens. That means if Citizens intentionally screws you over, there’s nothing you can do. This fits with the Legislature’s rigid ideology – you’re on your own.

Is there any way to stop this from happening? The Legislature isn’t listening to you, they are listening to insurance companies and free market necromancers. But legislators may fear the wrath of voters holding premium notices. Legislators may be in less gerrymandered districts next year due to Amendments 5 and 6. They don’t care about you, but maybe they care about themselves. Does that give you hope?