|Date:||June 07, 2016|
Preparing to leave state government after 27 years, former Florida Insurance Commissioner Kevin McCarty warned that South Florida faces further property insurance rate increases if a solution isn't found to water claims abuses.
McCarty will leave office after the first week of July after 13 years as insurance commissioner and 14 years prior to that in the Office of Insurance Regulation.
State-run Citizens Property Insurance Corp. has warned that its customers in the tri-county area could see indefinite 10 percent rate hikes starting next year if costly water loss claims, unrelated to storms, and attorneys fees from related lawsuits are not brought under control. Several other insurers are seeking rate increases this year.
And while insurance companies blame shady contractors and attorneys, McCarty said insurers need to more quickly respond to customers with legitimate water loss claims so those customers don't reach out to "fraudsters" first.
"They could all do a better job of communicating the importance of contacting your insurance company in the event of a loss," he said. "Let's be candid, [contacting insurance companies] is not always easy to do. And that may be the beginning of the problem."
McCarty said he's eager to see whether new policy language approved for Citizens and most other insurance companies spelling out policyholders' claims reporting responsibilities can help rein in costs. Citizens "should be applauded" for its new public relations program urging customers to "call Citizens first," he said.
McCarty, who grew up in Sunrise and graduated from Piper High School, joined the office just before Hurricane Andrew struck South Florida in 1992 and was responsible for creating the first state-run agency to make insurance available after national companies started pulling out. In 2002, the agency became Citizens.
Jay Neal, president and CEO of the Florida Association for Insurance Reform, said he can't imagine anyone else would have had a steadier hand overseeing the transfer of a million private-market policies to state-run Citizens after seven hurricanes in 2004-05 and back again to newly created private market insurers over the past four years.
"He faced enormous political pressure — one governor who said 'freeze rates without regard to risk' [Crist] and the next governor [Scott] who said 'we're going to get rid of Citizens in my first term,'" Neal said.
William Stander, executive director of the Florida Property & Casualty Association, said McCarty "built the template for future Florida insurance commissioners."
"He ably navigated a stable regulatory path through difficult waters, crisis after crisis," Stander said.
McCarty said his most impactful work as commissioner was helping to lead a national task force that forced life insurance companies to find beneficiaries by comparing all of their policies with the Social Security Death Master File. Florida's settlement, requiring insurers to search for deaths back to 1992, has recovered more than $500 million in policy benefits purchased by people "who were meager of means who bought their life insurance policies, maybe valued at $20,000, and paid in full over many years."
A new law passed this spring requires all life insurance companies in Florida to search annually for dead policyholders and to look for their beneficiaries.
Asked what he was unable to accomplish, McCarty said he wished he could have made life-saving drugs more affordable for HIV and Hepatitis C patients under the Affordable Care Act. Although his office forced removal of many barriers to the drugs, patients were still left with high deductibles, he said.
David Altmaier, like McCarty, was promoted to commissioner from within the Office of Insurance Regulation. He was promoted on April 29 and McCarty stayed for 60 days to help with the transition.
"My hope for him is that he continues to listen to good advice of people around him," McCarty said, "and that his decisions have lasting and impactful effect on the people of Florida."