clash, irate homeowners protest on opening day of session on
Article Courtesy of The Sun Sentinel
Kleindienst, Mark Hollis and Kathy Bushouse
Published January 17, 2007
TALLAHASSEE · With
homeowners across Florida demanding swift action, state legislators opened
their emergency session on soaring property insurance rates Tuesday, but
clashed immediately on how large a tab taxpayers should have to pay to
help rebuild after a major hurricane.
Causing the early discord was a Senate plan that would place a $20 billion
ceiling on what private insurance companies would have to pay policy
holders to reimburse storm losses. Remaining claims would fall to Florida
taxpayers, and would be paid for through a tax hike, cuts in the state
budget, or a special fund.
The brainchild of Senate Democratic Leader Steve Geller of Hallandale
Beach, the idea has been embraced by the Senate's Republican leaders and
tentatively endorsed by Republican Gov. Charlie Crist, who has called the
insurance crisis the most urgent problem facing his two-week-old
administration. The theory is premiums will drop and competition increase
if insurers no longer have to carry expensive reinsurance -- insurance
coverage insurers buy to help pay claims -- to cover losses in the event
of a catastrophe.
The proposal amounts to a bet that Florida won't experience another storm
like Hurricane Katrina, which caused an estimated $40 billion in damage to
insured property, anytime soon. The eight hurricanes that ravaged the
state in 2004 and 2005, Katrina included, caused about $30 billion in
damage. On Tuesday, Geller was urging action, warning that homeowners who
have seen their insurance bills double and triple won't wait.
"Remember those old black and white movies -- Frankenstein --
where the villagers with the pitchforks and the torches were marching on
the castle?" Geller said. "If we don't pass something to reduce
insurance rates this week, they're going to march on Tallahassee. And you
know something? We would deserve it."
But House leaders, Republicans and Democrats alike, are skeptical. House
Speaker Marco Rubio, R-West Miami, said the Senate proposal
"threatens to transfer significant amounts of risk on the backs of
taxpayers," and couldn't be given due consideration until the
Legislature's regular annual session starts in March. The House prefers to
make it easier for private insurance carriers to tap the state's Hurricane
Catastrophe Fund for lower-priced reinsurance, then pass along savings to
Despite the disagreement, most legislators said they are convinced they'll
come up with some legislation at the emergency session, which ends at
midnight Monday. "House members and senators understand the crisis
we're in with this. The citizens of Florida have said, `You're going to
get this done,' and that's what we're going to do," said Senate
President Ken Pruitt, R-Port St. Lucie.
"We all have the same goal in mind. We want to reduce rates,"
said Rep. Ellyn Bogdanoff, R-Fort Lauderdale, one of the House leaders.
The legislators are under pressure from Crist, who campaigned last fall on
the need for consumer-friendly legislation that would cut property
insurance prices for all.
"Florida's homeowners are carrying the heavy load of property
insurance costs," Crist said Tuesday. "This burden is weighing
our people down with worry and harming our way of life."
The session began without much fanfare, although about 100 angry
homeowners from Key West and the state's Gulf Coast showed up at the
Capitol to prod their representatives. Wearing armbands of blue material
that evoked the tarps that still cover roofs of hurricane-battered homes
across Florida, they sat in committee meetings and scurried around the
Capitol to meet with local legislators.
Clayton Lopez, a Key West city commissioner and fifth-generation
"Conch," or Keys native, told the House committee that "the
very fabric of our community is unraveling" because of escalating
Terry Eibert, another Key West resident, said her Citizens Property
Insurance Corp. premiums jumped from $3,000 to $10,000 a year for $250,000
of coverage. Citizens is the state-backed company that takes policies
dropped by the private market.
The full House and Senate are scheduled to meet again today to discuss and
amend respective bills, with some predicting they could reach a deal as
early as Friday. Options the legislators are mulling over include:
>Four-year ban on non-renewals
Stop private insurers from dropping policies for at least the next four
The 25 percent rate increase that took effect Jan. 1 for the almost 1.3
million residents insured by Citizens would be repealed. Customers who
have already paid the increase would get a refund.
As of Tuesday, no bill had been introduced that would mandate a rate
rollback for the millions of Florida homeowners who are insured by private
Homeowners might be offered a smorgasbord of options to reduce their
premiums but they would get less in exchange, and would have to pay a lot
more out of their own pocket to fix storm damage. Among the possibilities
are insuring only the house or condominium itself, and not the contents
and allowing homeowners not to buy any windstorm coverage.
>Cherry picking and pups
Cherry picking is when insurers choose to sell more profitable policies,
such as automobile coverage, but refuse to offer riskier homeowner
policies. Private insurers could be forced by law to sell property
insurance in Florida, if they offer such coverage in other states but only
sell other kinds of insurance in Florida.