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Gallagher Orders Fwua to Justify Rates

9/5/2001

TALLAHASSEE - Treasurer and Insurance Commissioner Tom Gallagher today ordered the Florida Windstorm Underwriting Association (FWUA) to cease and desist from any future rate increases and justify its current rates. The order follows a state hearing officer's recent ruling that the Florida Department of Insurance has "plenary" authority over the FWUA and its operations.

"We are already fighting the exorbitant windstorm rate increases being phased in by the FWUA at the appellate and circuit court levels," Gallagher said. "The hearing officer's ruling affirms that the department has final authority over the FWUA's operations and opens another door for us to pursue rate relief for windstorm policyholders."

Last week, state hearing officer John G. Van Landingham ruled that the FWUA was a state agency and failed to follow rulemaking procedures required of all state agencies.

Gallagher said the hearing officer's ruling indicates that the FWUA should adopt its rates and policies through rulemaking. Since the FWUA does not have rulemaking authority, it would need to work through the department for final approval of its rates and plan of operations.

In 1999, the department denied the FWUA's request for a 96 percent average statewide rate increase. An arbitration panel overturned the department's decision and approved the increase.

Although the department is appealing the arbitration panel's ruling, the FWUA began phasing in a 5-year rate increase, beginning with 20 percent in July 2000, up to 30 percent increase in July 2001, and up to 40 percent in July 2002. Some policyholders will be subject to further rate increases, up to 40 percent annually, until 2005.

The department is also a party to a class action lawsuit challenging the constitutionality of the arbitration panel's authority to approve the rate increase.

Gallagher also announced that he has opened an investigation into the 200-plus consumer complaints the department has received regarding the FWUA. Complaints range from unreturned premiums and unfair claim denials to failure to provide discounts for home improvements.

Also, a special toll-free number - 1-888-357-8676 - has been established for any FWUA policyholders who believe they have been treated unfairly. The department has extended the hours of operation for the windstorm helpline from 8:00 a.m. to 8:00 p.m. E.S.T. until September 19, 2001.