Florida Property Insurers Face Possible Class Action over Broken Promises
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Florida Gov. Charlie Crist is investigating a possible class action suit against property insurers for failing to lower rates and pass on savings to insurers after receiving historic concessions from the Florida Legislature.
In the face of massive lobbying by insurance companies begging for relief from several years of disasters and allegedly declining profits, the Florida Legislature in January 2007 overhauled the state's insurance statutes in an effort to relieve the pressure on insurance companies. The trade-off was to be lower insurance rates for Florida property owners, who desperately needed such cuts after devasting losses in 2004 and 2005.
Instead, many insurers, including some of the largest -- such as Allstate and Nationwide -- either reduced their rates minimally or asked for rate INCREASES.
''I'm increasingly concerned they are potentially violating the new law,'' Crist told The Miami Herald.
``Common sense would dictate to you that if they are not passing on the savings to the customer, they are violating the law that says they must pass on the savings to the customer.''
As reported in the Herald, the core of the dispute is the January 2007 law, which provided billions in additional cheap reinsurance to private insurers in return for a requirement that they pass on the savings to consumers.
Many companies have lowered their rates but ''those that have not should be accountable,'' Crist said. He said he believes companies may have tried to skirt the law by minimizing their risks and maximizing their profits illegally.
Allstate has had the temerity to ask for rate ranging from 27.4 percent to 43.4 percent. At the same time, Allstate has dropped at least 350,000 Florida policyholders in the past four years.
''There are consequences to violating the law if we can show that they have -- and I believe that they have,'' Crist said.