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Insurance Insolvency: Rates May Be Too Low

April 22nd, 2010 by flanews

Insurance company Northern Capital folded earlier this month and as many as six other insurers are on the brink of being unable to pay claims.

Industry experts say companies arent prepared to pay claims because rates are too low, and as Whitney Ray tells us, legislation that would allow companies to raise rates without state approval is stalling under the threat of the governors veto pen.

Hurricane season is right around the corner and 70-thousand Floridians are scrambling to find coverage because their insurance company Northern Capital folded.

The company didnt have enough money to pay claims in the event of a major disaster; half a dozen or more are on the brink of collapse. State Senator Mike Bennett says smaller insurers have flooded the market because the state is keeping large companies from charging a fair price.

They keep wanting to finances these little weak companies and we are letting major companies leave the state of Florida, said Bennett.

Governor Charlie Crist vetoed legislation last year that would have allowed insurance companies to raise rates without the states approval. The bill is back this year, but with the governor on the war path, legislative leaders arent taking any chances.

The bill, which would allow companies to raise rates 20 percent a year, was postponed in the House Thursday morning. By noon Crist reasserted his distaste for the legislation.

I think a bill like that, that would increase rates like that in the insurance industry, is not good for the people of our state, said Crist.

The governor called a special session of the legislature in 2007 to lower insurance rates. Some lawmakers who voted with the governors wishes now say its the worst decision of their legislative careers.

Posted in Charlie Crist, Housing, Hurricane Season, Insurance, Legislature, Politics, State News, Weather | No Comments »

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