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SB 563 would amend the Insurance Code to define “commercial property insurance” as insurance coverage against loss caused by or resulting from loss, damage, or destruction of real or personal property provided through a commercial property insurance policy.
As said in the author's statement of intent "commercial property insurance" has not been defined by the state but rather the profession for years. This bill is under consideration because in a previous session the legislature defined "multi-peril" policies which then had the unintended consequence of creating confusion regarding whether insurance for commercial property should be defined as multi-peril or commercial property insurance.
The situation addressed by this bill represents one of the things that confounds people most about government and perpetuates their cynicism about it. Because of the definition added in a previous legislative session government confused the industry, which was operating freely based on the demands of it's customers, as to what they could or could not provide under the new law. This confusion was entirely created by government intervention in the marketplace.
Now, instead of government repealing the legislation that caused the confusion in the first place and allowing the industry to be free once again, the proposed solution is to add additional statutory regulation. Yes, if passed this bill would likely clear up some confusion for the insurance industry and allow them to proceed with more clarity. In our view a better solution would be to repeal regulations and allow insurance companies to provide the coverage people and businesses want at a rate they are willing to pay rather than attempt to fix a government-created problem with...more government.
We are neutral on this legislation because it may be preferable to the status quo, but we urge legislators to find ways to solve problems by getting government out of the way instead of more deeply involved. Who can say what unintended consequences a future legislature may have to address as a result of this legislation?