One of the many insurance reform bills on tap this legislative session moved through the Senate Budget Committee Tuesday, but suffered a setback at the same time.
Consumer advocates and trial attorneys have complained that insurance companies are getting everything they ask for this legislative session, but Sen. Mike Fasano, R-New Port Richey, has chipped away at some of those bills in recent weeks.
Fasanos amendment to keep current law allowing homeowners filing a claim to spend money received from insurance companies on items other than repair or replacement was tacked on to Senate Bill 408 Tuesday, receiving the support of five other Republicans.
The original bill, sponsored by Sen. Garrett Richter, R-Naples, held back insurance payouts of claimsfor the actual value of damaged property until receipts or proof of repairs could be shown.
Homeowners are going to have to pay out the money ahead of time. If its not broken, why fix it? Fasano said.
Last week, Fasano was also successful in adding an amendment switching a provision in a separate insurance bill that would have allowed companies to get approval for rate hikes after the fact. The amendment maintains current law, which compels insurance companies to get rate increases approved by the Office of Insurance Regulation before they take effect.
Richters bill still includes cost-saving provisions for insurers, like allowing insurance companies to drop sinkhole coverage from their policies. He stated that Fasanos amendment would prevent premium decreases for policyholders because insurers are overpaying for some claims.
What this (bill) does is ... addresses how and when full replacement is completed and paid for. With the bill, premium rates should drop, Richter said.
Fasano was not moved by that argument, and offered harsh criticism of insurance companies.
I have no trust in the insurance companies, the property and casualty insurance companies. For years theyve been telling the Legislature that if you pass this and pass that, or put this in the statute that premiums will come down. Weve seen that to be an absolute lie, Fasano said.
But insurance reform advocates contend that changes are needed to bulk up an industry whose rates have been held artificially low in recent years by Gov. Charlie Crists regulatory agencies.
Although there havent been any major hurricanes or tropical storms that have hit Florida in recent years, skyrocketing sinkhole claims have led to higher costs for insurers. State Farm recently asked the OIR for an average 28 percent statewide increase in homeowners policies, due largely to the spike in sinkhole claims.
Consumer advocates also decried the bill for allowing claim payments to be made to banks when claims are paid on mortgaged property.
Richter, however, pushed back against suggestions that banks and lenders are purposefully holding claim payment checks on mortgaged property in their name in order to gain interest. Making sure repairs are made to a home in order to prevent the depreciation of the house is more important for lenders, he said.
Interest on an escrow account is absolutely minimal compared to maintaining the value of a home mortgage, Richter said.
The bill now heads to the Senate Rules Committee.
Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.
