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Saturday, July 3, 2004
State urges insurers to back off GIs
THOMAS S. BROWN
NEWS-JOURNAL BUSINESS WRITER
DAYTONA BEACH — Car insurance companies, lighten up on our military.
That's the message state regulators have sent to Florida's insurance industry after receiving complaints that several insurers have refused coverage or jacked up rates for GIs returning from Iraq and Afghanistan.
Tom Gallagher, the state's chief financial officer, said problems stemming from lapsed policies started coming to light only a few weeks ago. About 30 complaints from all parts of the state were logged over a month's time.
"What we heard was very disheartening: service men and women returning to find their auto premiums significantly increased or their applications for new coverage denied," Gallagher said.
At his direction, the Florida Office of Insurance Regulation issued a bulletin to insurers on June 17, asking them to waive underwriting rules that normally give a black mark to anyone who has let a previous insurance policy lapse. The state wants insurers to give special consideration to 80,000 Floridians on active duty so they won't be penalized for canceling coverage when they leave the country.
Nina Banister, a spokeswoman for Gallagher, said insurance companies may have acted unwittingly, not realizing their continuity-of-coverage rules would have unintended consequences for the military. And some of the military people might not have explained to their agents why they were dropping their policies.
“We feel it may have been miscommunication on both sides,” she said.
Alison Boscovich, a State Farm agent in Ormond Beach, said a few of her military clients have encountered problems with escalating premiums but she was able to get lower rates for them after explaining their situations to the company.
In one case, she said, she helped Justin Huckaby, 20, a Marine corporal who was sent to Iraq in February, arrange “suspended-operation” coverage for a nearly new Mazda pick-up being stored in his family’s garage. That bare-bones package insures the vehicle against fire and theft, and includes $10,000 worth of liability coverage in case a relative wants to drive the vehicle around the block occasionally to exercise its engine.
Denise Huckaby, the Marine’s mother, said the family has taken advantage of that option a couple of times to use the truck for a few days.
The scaled-down insurance is saving the client more than $1,400 a year on his premiums, she said.
Several other insurance companies in Florida are offering similar options to help military people reduce their insurance costs, said Sam Miller, executive director of the Florida Insurance Council. “Most companies will accommodate military people,” he said.
However, Richard Brown, a vice president of Hayward-Brown Insurance in Daytona Beach, said many insurance carriers have been lukewarm about accepting military customers. “It’s not because they’re a higher risk, but because they move around a lot,” he said.
The industry’s automated underwriting system has been treating any lapsed policy as a trouble sign for many years, Brown added. The insurers’ computers interpret that circumstance as a clue the client in the past was unable to pay premiums or else lost his license, totaled a car or filed numerous claims.
Bob Lotane, a spokesman for the Florida insurance office, said the agency’s “bulletin” to insurers asks them to change their procedures voluntarily. “We can’t force them to do this but we expect most of them will comply,” he said.
Ten other states have taken similar action, starting with North Dakota, which spotlighted the issue in April. After the National Association of Professional Insurance Agents began lobbying for changes in May, other states joined in, including Colorado, Connecticut and Michigan.
Representatives of State Farm, Allstate, Auto-Owners Insurance and other insurance carriers said they are complying with Gallagher’s request.
State Farm spokesman Tom Haggerty said his company is making sure military people can reinstate their coverage on the same terms they had before being sent overseas.
“But if they’ve been away for a year or two, and there’s been a general rate increase in the meantime, they’re going to have to pay that higher rate when they get back,” he added.
Haggerty said military people should be sure to tell their agents about an impending deployment, rather than just leave insurance bills hanging after they ship out.
Allstate spokesman Ryan Priest said his company softened its lapsed-policy rule before the state issued its bulletin. Its new procedure is to offer same-rate reinstatement to any service person whose policy lapsed during an overseas assignment, whether or not it was in a war zone.