House, Senate differ on fixes for woes

Lawmakers begin efforts to lower insurance rates

but dispute how to get there.

Article Courtesy of The Miami Herald

Published  January 17, 2007

Legislators opened their weeklong special session Tuesday determined to lower homeowners insurance rates and immediately fell into disagreement over the proposals that would most radically lower premiums.

The differences emerged between the House and Senate over how far to go to let the state shoulder the risk from the most massive storms and whether to allow the beleaguered Citizens Property Insurance to lower its rates by offering more types of insurance policies, not just those that offer wind coverage.

In each chamber, Democrats worked in lockstep with Republicans, and citizens groups from as far away as Marathon flocked to their committee meetings to plead for financial relief.

The House took the more conservative approach, pushing a plan to lower insurance premiums by offering more state-subsidized back-up reinsurance to private companies. The plan would increase the chances the state would have to bail out its Hurricane Catastrophe Fund by assessing fees on all lines of insurance, but it exposes the state to less total financial risk than the Senate's plan.

The Senate's plan exposes taxpayers to the risk of seeing a tax increase to pay for a rare but horrific storm, but the gamble promises to save homeowners as much as 40 percent on their windstorm insurance, promoters claim.

Senate leaders want to cap the amount of money the private insurance industry would have to spend at $22 billion, and they want to let Citizens repair its weakened balance sheet by expanding into other, more profitable lines of insurance.

MESSAGES FOR LAWMAKERS: Protesters gather on the steps of the old Florida Capitol to protest the high cost of homeowners insurance rates on Tuesday in Tallahassee.

Gov. Charlie Crist has endorsed the Senate's approach, but House Speaker Marco Rubio told House members he prefers to take a ''narrow approach'' and focus on ideas that have been around for more than a week.


The House proposes instead to lower premiums by offering consumers more insurance choices, provides more ways for homeowners to strengthen their homes and lowers the cost of reinsurance to Citizens and private companies.

''We certainly feel a lot more comfortable with the other ideas that don't transfer an enormous amount of incalculable risk onto the shoulders of taxpayers,'' Rubio said.

Rubio indicated late Tuesday he may be open to a compromise, however, and House and Senate negotiators began floating alternatives to reduce the state risk but preserve the cost savings.

As they moved farther apart on the major issues, the House and Senate edged closer on consumer protections and insurance choices. A House committee passed a plan to give policyholders the ability to exclude their furniture and belongings from any homeowners insurance policies, similar to one offered by the Senate, and agreed to allow any homeowner to seek homeowners policies that cover just the outstanding balances on their mortgages.

As the House and Senate tried to isolate their differences, the governor threw in a new proposal.

Crist's proposed prohibiting insurance companies from canceling policies until December 2010, with some exceptions. The proposal was delivered to the media but legislative leaders said they hadn't seen it.

Rubio said he was ''giving deference'' to all of Crist's ideas while Sen. Bill Posey, the Banking and Insurance Committee chairman, said he had serious problems with it.

Senate Republicans continued to defend their controversial approach, which business groups are calling a ''big government'' solution.

''It's government's role to stabilize, and that's what you're seeing here,'' said Senate President Ken Pruitt. "All we're asking for is a venue for the House to allow the ideas to float.''

Explained Posey: ''We're the free-market people over here. We're the people who would lay our body down in front of the train in any other circumstance.'' But because the free market has not been able to offer homeowners an affordable policies, "it's not a solution.''


Meanwhile, citizens groups are trying to keep the heat on lawmakers. About 30 homeowners from Marathon chartered a plane to Tallahassee to remind them of the dire situation Monroe County homeowners face.

Few citizens illustrated the distorted insurance troubles like Carl Schwensen, 61. The owner of a 900-square-foot home in Key West's Truman Annex, he said he is now paying $9,000 a year for insurance.

''It's crazy. I have investments, but I don't know how long I can live off them with this,'' Schwensen said.