Now in the home stretch of the special insurance session that started on Tuesday, Florida legislators need to keep their eyes on the prize: Whatever they finally approve must reduce premiums for all policyholders. That includes Floridians insured by private companies as well as those forced to rely on Citizens Property Insurance, the state-backed firm that covers nearly 459,000 homes in South Florida alone.
Legislators in the state House and Senate commendably have forged consensus on promising provisions. They agree to:
• Extend the state's tougher building code to Panhandle areas now exempted.
• Repeal a 56 percent rate increase for Citizens policies wrongly mandated by the Legislature last year and freeze 2006 rates.
• End the mandate that Citizens charge the state's highest rates.
• Give homeowners more options for reducing coverage and costs, even if at greater risk.
• Require insurers that cover homes elsewhere to do so in Florida.
Still, wrangling continues over other issues. One question is how to entice private insurers to lower rates by selling them cheaper reinsurance, which covers insurers for catastrophic losses. Both chambers want to expand Florida's catastrophic fund. The House wants to offer more reinsurance but charge for it.
The Senate wants to offer the extra reinsurance to all insurers for free. Both would require insurers to pass the savings to policyholders. A Senate proposal would allow Citizens to expand into selling more-profitable coverage, such as fire and theft. But the House would fire Citizens' current board and reform its operations first.
Unfortunately, there is no magic bullet. Freezing Citizens' rates is an improvement over double-digit hikes, but won't lower already exorbitant insurance costs. The rate freeze could also result in painfully high rate hikes afterward to keep Citizens financially sound. There's also no guarantee that insurers will buy more reinsurance from the state and, thus, have savings to pass on. State Farm, Florida's largest private insurer, already has said that its parent may offer even cheaper reinsurance. The Senate's reinsurance plan could stick Florida with the tab for catastrophic losses it won't be able to cover.
Here to stay
One thing is certain: Now the state's largest insurer with 1.3 million policies, Citizens is here to stay. The Legislature needs to reform it into a competitive business that sells more-profitable insurance lines and delivers good service.
Ultimately, South Floridians are counting on Gov. Charlie Crist, House Speaker Marco Rubio and Senate President Ken Pruitt to deliver promised relief. They and the South Florida delegation shouldn't come home without it.