TALLAHASSEE - Concluding last week's legislative session, Gov. Charlie Crist hailed a bill to strengthen the state-run property insurer, calling it the "nail in the coffin" of an insurance industry "that's hurting the people."
The bill is best known for freezing Citizens Property Insurance Corp. rates until 2009 and for cutting the entry barriers for those policyholders whose private insurers are charging more than rates for the state-run Citizens.
"The bill accomplishes all the governor had intended for Citizens this session," said the governor's special counsel, Chris Kise, who worked on the deal. "It increases affordability through Citizens."
But that's only part of what the 91-page bill does; tucked inside are several coups for the insurance industry, not all of them viewed as consumer-friendly. Some examples:
- It watered down provisions to prohibit new Florida-only subsidiaries and force parent companies to report profits with a big loophole and a pushed-back effective date, January 2009.
- It spends $600,000 to fund a 19-member commission - with nine members representing insurers - whose sole focus is shrinking the state-run insurer, by analyzing things like the "adverse effects" of new insurance changes the Legislature passed in January.
Lawmakers involved in the dealmaking late Thursday night and early Friday morning said that they did their best and they achieved their top goal, legislation that aims to cut rates.
"I hated the commission; it's a really lousy idea," said House Minority Leader Dan Gelber. "But at the end of the day, the governor made it clear he wanted the bill passing and had we tried to strip that out, it might have endangered the whole bill."
Consumer advocates were concerned about several provisions, such as eliminating the ability of the state's insurance consumer advocate to rate commercial insurers through report cards.
Also, the legislation allows insurers to pay a "portion of a claim" and meet the 90-day prompt-pay requirement. But the bill also says insurers must pay interest on the remaining unpaid portion.
The bill removes consumers' ability to file a lawsuit against their insurers based solely on their company not making the 90-day prompt-pay deadline.
"I'm not overjoyed," said Bill Newton of the Florida Consumer Action Network. "We did manage to get a lot of our stuff through, but insurers got their stuff too."
Last summer, Crist campaigned against Florida subsidiaries (known as "pups") that funnel profits to their parent companies, while the parent is shielded from liability.
However, the provision that's supposed to stop new pups and require parent companies to report profits has a loophole for insurance company subsidiaries structured like Allstate Floridian Insurance Co. or Nationwide Insurance Co. of Florida, both of which are "domiciled" outside of Florida.
Insurance companies don't like the language anyway, because it "creates an environment that doesn't attract companies," said State Farm spokesman Justin Glover.
When Sen. Carey Baker, R-Eustis, pointed out the loophole on the floor of the Senate last week, the bill's sponsor, Sen. Rudy Garcia, R-Hialeah, shrugged his shoulders and said it was the best they could do.