Lawmakers tough on insurance

Lawmakers tough on insurance

Article Courtesy of The NewsJournal

By JIM SAUNDERS and JIM HAUG
Published January 18, 2007

TALLAHASSEE -- As Charlie Crist campaigned across the state last year, he vowed to get tough on insurance companies.

Now, lawmakers look like they might help carry out his pledge.

The Florida House and Senate moved forward Wednesday with a controversial proposal designed to prod more insurers to sell coverage for homes and businesses.

Crist and his supporters want to require companies to sell property insurance if they also sell other types of policies, such as auto insurance, in Florida.

The requirement wouldn't affect every company -- only those that also sell property coverage in other states. But Crist argues it would end "cherry-picking" by insurers that want to sell profitable types of insurance in Florida while refusing to offer riskier property coverage.

"The cherry-picking in this state has got to stop," said Sen. Mike Fasano, a New Port Richey Republican who helped push through an amendment Wednesday that would ban the practice.

But some lawmakers and insurers warned the idea wouldn't reduce property-insurance rates and could create problems in other types of insurance.

"You do something crazy, you end up with a property-insurance crisis as well as an auto-insurance crisis," said Senate Banking and Insurance Chairman Bill Posey, R-Rockledge.

William Stander, an assistant vice president of the Property Casualty Insurers Association of America, called the idea "highly destructive." "I

Highlights

Florida lawmakers met for the second day of a special legislative session aimed at solving the state's property-insurance problems. Here are highlights from Wednesday:

· The House and Senate passed their versions of property-insurance bills and likely will begin negotiating a final compromise today. It is unclear how long the negotiations will take, though the session could last until Monday.

· The bills include plans to expand the state's role in selling low-cost "reinsurance" - a crucial form of backup coverage - to insurance companies. Lawmakers say the additional reinsurance will save money for insurers, with the resulting savings passed on to consumers. The House and Senate still need to work out differences about how much financial risk the state should take in expanding its role.

· Both chambers want to repeal rate increases for customers of Citizens Property Insurance Corp. But they will need to work out disagreements about a Senate plan that would allow Citizens to expand the types of coverage it sells.

think the consequence of this (Senate) amendment is less insurance" of all types, said Stander, who lobbies for the industry in Tallahassee.

The debate about so-called cherry-picking came as lawmakers held the second day of a special legislative session to tackle the state's growing property-insurance problems.

The House and Senate passed wide-ranging bills Wednesday that will set the stage for negotiations on a final bill in the coming days. Lawmakers promised to reduce rates that have soared since eight hurricanes hit the state in 2004 and 2005.

Crist, who took office Jan. 2, has said cutting rates is his top priority. But throughout the campaign, he also railed against insurance companies, a theme he continued Wednesday in talking to a group of Miami residents at the Capitol.

"Things have changed in Tallahassee. The insurance companies used to tell us what to do," Crist said. "Now you (residents) tell us what to do. It's called democracy."

But State Farm lobbyist Mark Delegal told House members this week the state's property-insurance problems stem from hurricanes -- not insurance companies.

"I frankly don't think it's fair to villainize the insurance industry," Delegal said.

The cherry-picking proposal has been a key part of Christ's efforts to overhaul the insurance system.

House Speaker Marco Rubio, R-Coral Gables, said the House is largely deferring to Crist on cherry-picking and another proposal to place new regulations on subsidiaries of national insurance companies.

"Our new governor was elected on a platform, and that was part of his platform," Rubio said.

Though the House and Senate both backed Crist's anti-cherry-picking proposal Wednesday, they still need to work out differences in wording their bills.

Fasano said it is unclear how many companies could be affected by the idea.

But he said it could affect companies that might want to stop selling property insurance in Florida but continue selling auto coverage. Similarly, it could affect companies that want to enter Florida's auto-insurance market but don't want to sell property insurance.

Some lawmakers, however, said the main goal of the special session is to reduce property insurance rates. They said the cherry-picking proposal wouldn't help meet that goal.