Bowing to pressure from tens of thousands of desperate home and business owners who can't find or afford property insurance, state lawmakers said Wednesday that they will meet in a special session Jan. 16 to try to fix the problem.
That lawmakers would call a special session on insurance before the regular session begins March 6 had been widely predicted. But what legislators can accomplish in the session, expected to last no more than a week, is another matter.
Gov. Jeb Bush had promised to call a special session if lawmakers could agree on workable solutions. He applauded their effort Wednesday, but the task of calling the special January session fell to Gov.-elect Charlie Crist, Senate President Ken Pruitt and House Speaker Marco Rubio.
On the table initially are recommendations by Bush and his Insurance Reform Committee that make it easier for insurance companies to buy cheaper reinsurance through the state's Florida Hurricane Catastrophe Fund, extend a mitigation grant program and allow consumers to buy a variety of policy types that would increase their risk but lower their rates.
But attention is likely to center on a new and potentially devastating 55.8 percent rate hike from Citizens Property Insurance.
"The most important thing to do is repeal the provision in Senate Bill 1980 as soon as possible," said Sen. Mike Fasano, R-New Port Richey, referring to legislation passed in May that forces Citizens to seek the new and sharply higher rate.
No state has come close to the property insurance problems that Florida has faced since eight hurricanes raked the state in 2004 and 2005 and caused close to $40-billion in insured losses.
As a result, major insurers such as Allstate Floridian, State Farm and Nationwide have dropped thousands of policies and pushed their rate hikes well into double digits.
The 2005 storms, Hurricane Wilma in particular, brought on the state's largest insurance insolvency on record when three subsidiaries of the Poe Financial Group failed to pay claims totaling nearly $800-million.
Meanwhile, property owners are being forced in growing numbers to go without insurance, sell their homes in a soft housing market or, in some cases, move out of state.
Role of Citizens
But no discussion about property insurance can leave out Citizens, the state-run insurer of last resort that now insures one in three Florida homes. With 1.3-million policies, Citizens' exposure to risk has soared to a record $400-billion. And with little capital in reserve, it is vulnerable to another round of major storms.
Senate Bill 1980 requires Citizens to factor private reinsurance costs, something it doesn't buy, into its rate filing. The thinking was that Citizens could build its reserves with the extra revenue.
But the insurance crisis took on a new dimension earlier this month when the numbers for Citizens' new filings were released.
Citizens now has to raise rates for its nearly 400,000 wind-only policies an average 55.8 percent beginning March 1. That's in addition to an already approved 25.9 percent increase scheduled to go into effect Jan. 1.
But Bruce Douglas, the chairman of Citizens board of governors, told the St. Petersburg Times last week that he would recommend the board not approve the March 1 rate hike, saying it was excessive.
"We plan on leaving nothing sacred. Everything will be on the table," said Sen. Bill Posey, R-Rockledge, who is heading the insurance issue in the Senate.
But, he added, "There's more that needs to be done than you can do in a week."
A lot of work ahead
Posey said it's more feasible to work on things people can agree on, and offered a statewide building code as an example. More sweeping ideas, such as lowering the threshold for companies to get reinsurance from the state, may not be easily accomplished, he said.
House Minority Leader Dan Gelber, D-Miami Beach, is skeptical much will get done.
"While I'm not totally pessimistic, I'm not sure they are up to the task," he said. "Everybody coming back to Tallahassee, at least most Republicans, voted for that bill earlier this year. It's not as if we weren't in a middle of crisis then. There really needs to be a meaningful change of heart of Republicans if we're going to solve this crisis."
Democrats have advanced the idea that the state assume part of the risk, such as covering up to the first $100,000 in damages.
That may not happen, but some Republicans are talking about greater state involvement. Crist, for one, wants to make it easier for insurance companies to gain access to the state catastrophe fund, by lowering the threshold for losses from $5.3-billion to $3.2-billion.
Crist has also talked about curbing "cherry picking" by companies that sell property insurance in other states but only other types of insurance, such as auto, in Florida.
Looking for ideas
Former state Sen. Ken Plante said special sessions can be risky, especially ones dealing with complex topics. In 2003, Bush called three sessions to seek a cap on medical malpractice lawsuit awards, but the issue bitterly divided Republicans and Bush did not get all he wanted.
"If it's a total failure, the public can get upset with you," Plante said.
Plante said it is wise to wait until mid January because it will allow time for specific ideas to emerge.
House Speaker Rubio, R-Miami, is planning to do just that next week, convening a three-day insurance "conference." Lawmakers will be given a crash course on how the insurance industry works and how hurricanes factor in, and then be encouraged to discuss policy proposals.
But what substantive changes will be made? No one is sure.
"I'm scared to death about it," said Ginny Stevens, president of Pasco County-based advocacy group Homeowners Against Citizens. "Our big fear is the same old nothing. If they're going in with just what the Reform Committee suggests, there will be no help for the people."
Bill Newton, executive director of the Florida Consumer Action Network, said the Legislature has the proposals that could lead to relief for policyholders. The problem, he said, is sifting through the data and finding a true fix.
"There's going to be a lot of work to try and make sure something good comes out of this," Newton said. "The insurance companies have the upper hand, so it's hard for me to be terribly optimistic."