Politics

Ray Rodrigues Wants to Know When Property Insurance Rates Will Go Down

By: Eric Giunta | Posted: June 24, 2013 4:35 PM
Ray Rodrigues

Credit: myfloridahouse.gov

Florida's property insurance companies are paying less for reinsurance than they were last year, but those savings are not being passed on to their policyholders, and one state representative is demanding to know why.

“As the commissioner for the Office of Insurance Regulation, it is my understanding that you alone are responsible for approving or disapproving the rates for insurance companies,” freshman Rep. Ray Rodrigues, R-Estero, writes to Commissioner Kevin McCarty in a June 24 letter obtained by Sunshine State News. “What is the process and timeline for insurance companies to include the decreased cost of reinsurance and when, from a practical standpoint, will long-suffering Floridians begin to see rates stabilize and decrease in many cases based on reinsurance savings?”

[Scroll down to read the letter, attached to this article.]

Reinsurance is a special type of insurance purchased by insurance companies in order to protect themselves against losses they would have to suffer when making a huge payout. With reinsurance, insurance companies are able to cover properties they otherwise wouldn't be able to afford to -- e.g., homes in high-risk areas like hurricane-ridden Florida.

“As you know, it is in the best interest for Floridians to close the 'gap' between rates in Citizens – Florida’s government insurance company – and private insurance companies,” Rodrigues writes, referring to the artificially cheaper rates paid by Citizens policyholders compared to their private-sector counterparts. “A part of closing the gap, I would think, would be that the premiums for private insurance policyholders decrease in 2014, assuming the insurance company has adequate or even better reinsurance backup.”

Florida's property insurance rates skyrocketed after the 2004-2005 hurricane season, in part because of the costs insurance companies have incurred acquiring reinsurance for policies in high-risk areas. According to an op-ed recently published by Bradley Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers, reinsurance rates decreased by an average of 15 percent or more across Florida, as more investors have purchased shares in reinsurance companies.




Reach Eric Giunta at egiunta@sunshinestatenews.com or at 954-235-9116. 

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Comments (3)

Repubtallygirl
10:56AM JUN 25TH 2013
Ask Charlie Crist. He created the mess FL is in.
wawoo
6:17PM JUN 24TH 2013
FIRE , Finance, Insurance, and Real Estate interests own the State and Federal Legislatures, at least 90% of Republicans and 50% of Democrats and have more than made sure the regulators serve the regulated industry not the consumer and geeral public interests. Good for Rep. Rodrigues for asking but it will come to naught.
wbp
10:14PM JUN 24TH 2013
the only one you left out was the power companies. they own their share of florida legislators also.

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