Florida Lawmakers Subpoena Insurers Over Rates
By Michael Peltier
TALLAHASSEE, Fla. (Reuters) - Florida lawmakers on Thursday subpoenaed property insurers in a probe over why home insurance rates have not declined a year after the state doubled its hurricane insurance pool to at least $32 billion.
"Insurance industry representatives gave hours of testimony telling us that the price and scarcity of reinsurance was the reason they needed to keep rates high," Sen. Jeff Atwater, a Republican from Palm Beach, said in a statement. "Property owners' rates have not come down as promised."
Florida's Senate Banking and Finance Committee plans to hold two days of hearings beginning Feb 4. Unlike previous hearings, company officials will be admitted under oath.
Though no specific companies were named on Thursday, the committee wants to hear from big insurers including State Farm and Allstate Floridian Insurance Co (ALL.N).
"Sometimes, big business can be just as bad as big government, and I applaud the Senate for taking action today to unravel the mystery of why insurance rates have not come down as we understood they would," Florida Gov. Charlie Crist said.
Like State Farm, the state's largest private property insurer, Allstate has said the state's reinsurance program has little impact because the company buys most of its reinsurance from its parent company.
Florida officials question that argument given the industry's testimony last January, when lawmakers met to address property insurance premium increases after hurricane damage in 2004 and 2005.
Florida was raked by four hurricanes in 2004 and battered by Hurricane Katrina in 2005. Katrina killed 1,500 people on the U.S. Gulf Coast and caused $80 billion in damages after swamping New Orleans.
"We worked with the insurance industry and regulators who specifically told us that if we took certain actions to reduce the cost of reinsurance, rates would go down substantially," said Sen. Steve Geller, the Florida Senate Democratic leader.
"We took those actions. Some insurance companies kept their promise, but many did not. We need to find out why."
The state insurance regulator has also subpoenaed some insurance companies.
(Editing by Michael Christie, Toni Reinhold)
