BOUSQUET and TOM ZUCCO
TALLAHASSEE - Gov. Charlie Crist has enlisted the help of three high-powered trial lawyers in what could become a class-action lawsuit against Florida's insurance industry for conspiring to artificially inflate homeowner rates.
Crist said Tuesday that the three will review insurers' responses to subpoenas issued earlier this year by the state Office of Insurance Regulation for compliance with a new law requiring the companies to pass cost savings on to policyholders.
Regulators had calculated in March that homeowners could save an average 24 percent on their premiums, but the actual savings are closer to 12 percent.
"I want them to review the subpoena responses that are coming back from the insurance companies and to start to develop a theory to pursue legal action against those who may not be adhering to the letter of the law - possibly including a class action," Crist said.
The suit would seek, among other things, refunds on what Crist believes were overpayments on premiums.
The three lawyers, who are donating their time for free, are Roberto "Bobby" Martinez of Coral Gables, who headed Crist's transition effort a year ago and is a member of the state Board of Education; Dexter Douglass of Tallahassee, a Democrat who was Gov. Lawton Chiles' general counsel; and Robert Hackleman of Fort Lauderdale, a member of the firm that employed George LeMieux, Crist's chief of staff, at Gunster, Yoakley and Stewart.
"He's a great trial lawyer, and I've gotten to know him through George," Crist said of Hackelman. "So I have great respect for his judgment."
Crist said he chose Douglass in part because of his experience with Chiles' legal onslaught against the tobacco industry in the mid 1990s.
The three attorneys will work with Paul Huck, Crist's general counsel, and will, according to the governor, look at every company that has put in for a rate increase.
Among the more than two dozens companies asking for such an increase are United Services Automobile Association, Florida Farm Bureau and Allstate Floridian. Regulators denied Allstate's 42 percent rate increase last month, and on Tuesday, the state's third-largest property insurer said it was asking for an administrative hearing, the first step in appealing the decision.
For months, regulators have been looking at the relationships between insurers and the companies that sell them backup insurance, establish their financial ratings and build the computer models that predict future hurricanes.
Crist has said he suspects the insurers may have violated anti-trust laws and conspired with those companies to circumvent laws that direct insurers to buy cheaper backup coverage from the state and pass the savings on to policyholders.
So far, the state's weapon of choice is the subpoena. In August, Insurance Commissioner Kevin McCarty issued subpoenas directing officials from State Farm Florida to appear at a public hearing to explain their underwriting practices. The hearing was canceled, but the investigation of the company continues.
In October, it was Allstate's turn to be subpoenaed. Allstate executives must show up for a two-day hearing, Jan. 15 and 16, to explain how they do business.
"The January hearings are regarding (Allstate's) reinsurance programs, and their relationships to risk modeling companies, insurance rating organizations and insurance trade associations," Tom Zutell, spokesman for the Office of Insurance Regulation, said Tuesday.
Insurers have denied violating antitrust laws and argue that their hands are tied because rating companies insist insurers stockpile reserves in case of hurricanes. That means insurers have to buy more reinsurance than in years past, even though the state has not been hit by a hurricane in two years and those reserves have grown.
That excuse doesn't fly with the governor.
"I don't think we can trust this industry," Crist said at a recent Cabinet meeting. "I think I've been pretty clear about that. I don't, and I don't think the people do either. And I think what's important is that we get to the bottom of this."