When people talk about soaring insurance rates, they’re usually talking about health insurance or – particularly in Florida – property insurance. Another type of coverage has found its way onto the list lately: long-term care insurance.
The last post in this series.
A Florida newspaper’s report about the reinsurance market pointed out the enormous profits made by the off-shore companies — profits that could be, but aren’t, reinvested in the state. It doesn’t look as if the trend among Florida insurance companies of relying so heavily on these reinsurers is on the downswing, either. And, apart from the companies’ lack of commitment to the state and her residents, there’s something distasteful about the way reinsurers root for catastrophes.
We’re not quite done with our discussion of the reinsurance market in Florida. A recent news report brought to light the facts and the issues associated with reinsurance arrangements Florida insurance companies have taken on since the 2005 hurricane season. Homeowner insurance premiums have increased, but the money insurance companies rake in isn’t staying in the state. It’s going to off-shore investors, who run shell companies here while they track hurricanes from afar.
In our last post, we talked about Florida’s homeowner insurance market and a newspaper investigation into the industry’s growing reliance on off-shore reinsurance companies. The issue is a sensitive one for Floridians, given the multiple rate hikes over the past few years. The news report links the shift from “traditional” insurance companies to Hurricane Katrina.
Florida residents know all too well that homeowners insurance premiums have gone up over the past few years. According to quarterly premium reports, the average Florida homeowner’s rate has jumped 72 percent since 2003. Regulators have approved rates approaching $8,000 on a $100,000 Palm Beach home. In the Florida Keys, the same home would cost $13,000 a year to insure.
Here is a brief summary of some recent insurance-related decisions from October 2010:
When a fire engine plowed through his yard this past August, a homeowner in Spring Hill, Fla. figured he’d hear from the fire rescue district’s insurance company. What surprised him was how rude and arrogant the adjusters were; what he absolutely didn’t expect was that the insurance company would deny the claim, saying the district was under no legal obligation to pay because the damage was not the result of the driver’s negligence.
Florida’s state insurance company is the target of a class action suit filed last week. The suit, filed on behalf of 1.2 million Citizens Property Insurance Company policyholders, alleges that the insurer awarded 33 no-bid contracts improperly over the past six years. Citizens was founded to provide insurance to property owners, both private and commercial, who could not find insurance elsewhere.
Both the federal government and the State of Michigan filed suit this week against Blue Cross & Blue Shield of Michigan, alleging that the insurer’s “most favored nation” clauses with hospitals violate the Sherman Antitrust Act and the Michigan Antitrust Reform Act. The Justice Department did not indicate if there are plans either to investigate or to take legal action against health plans in other states; the outcome of the suit, however, will likely affect how the Blues and other health insurance companies contract with hospitals throughout the nation.
