on insurance crisis called
foresee only short-term solutions
Article Courtesy of The Ocala Star Banner
LLOYD DUNKELBERGER AND JOE FOLLICK
Published November 30, 2006
- Gov. Jeb Bush calls the lack of affordable property insurance "the
biggest threat to our economy."
But when lawmakers meet in a special session beginning Jan. 16 to deal
with the crisis, most don't expect any dramatic solutions to emerge.
Legislative leaders say because of the complexity of the issue, as well as
philosophical differences over how much of a role state government should
play in the insurance market, they are likely to try to reach agreement on
handful of issues offering some immediate relief to homeowners and
business, but are not likely to look at a comprehensive plan.
|"Are we just going to
do the easy things now, or are we going to try for the full
comprehensive solution?" asked Sen. Steve Geller,
D-Hallandale Beach. "The full comprehensive solution
& it is clear to me & will require a greater role
for Florida in assuming some of the risk."
But Geller admits that a broad approach is likely to run
into opposition from Republican legislative leaders,
particularly in the House, where lawmakers argue that the
state should lessen and not increase its role in the
volatile insurance market.
Rep. Dennis Ross, R-Lakeland, who has played a key role in
crafting insurance legislation in recent years, is among the
House leaders who believe a "free market" approach
is better for insurance rates in the long run.
He objects to suggestions that the state needs to back off a
plan that would require the state-run Citizens Property
Insurance Corp., which has become the largest insurer in
Florida, to raise its rates by an average of 56 percent,
beginning March 1.
Setting rates lower "than what the market will bear
doesn't solve the problem at all," Ross said.
"I would characterize it as being a free market versus
government-supported solution," he said. "That's
the crossroads we're going to find ourselves at: to what
extent does government insert itself in this solution."
Joe Gorman, president of The Villages Property Association,
said the insurance crisis was the focus of one of his
organization's recent meetings.
"A lot of our members are super concerned about
this," Gorman said.
Fears of skyrocketing premiums or lack of coverage
are more prevalent among those
SPECIAL SESSION ISSUES
Here are some of the issues lawmakers could take up in a
special session on property insurance that will begin Jan.
- Make it easier for property insurance companies to
acquire reinsurance from a state hurricane catastrophe
fund. If the companies can get cheaper reinsurance from
the state, it should result in lower costs for the
companies and lower premiums for consumers.
- Revamp a new state law that resulted in the
state-run Citizens Property Insurance asking for a 56
percent rate increase for homeowners and more than 600
percent increase for commercial policies.
- Eliminate financial barriers for foreign
reinsurance companies, allowing them to compete with
domestic companies in providing backup insurance funding
for Florida insurers.
- Enhance hurricane mitigation programs, including
requiring insurance companies to offer specific
discounts to homeowners who "harden" their
homes against storm damage.
- Allow homeowners to take more risks with their
policies, such as opting not to have windstorm coverage
or only covering the portion of their home that has a
mortgage on it. Another option would allow higher
own mobile homes in older sections of The Villages, Gorman said.
"It's especially hitting people hard in the historic section of The
Villages," Gorman said. "People have really been almost
Ross said there are "so many components to insurance reform"
that it's likely only a few issues where there is general agreement"
would be addressed in January. He said those might include increased
funding to harden homes and mitigate possible losses in hurricanes, as
well as changes to make it easier for insurers to access funds in case of
He bristled at talk of allowing Citizens to re-evaluate its rate plan.
"I don't want to look at it, but I'm sure it's going to be
considered," said Ross, saying that "I take offense" to the
agency's refusal to adjust its rates to allow a freer market.
"We say, 'This shall be done,' and then the agency or department
says, 'We're not going to do that.' I have some grave concerns over
that," Ross said.
Citizens has announced plans to raise rates by 56 percent or more for
homeowners, blaming a provision in a new law approved earlier this year
that requires the agency to base its rates on damages wrought by a storm
that would occur every 100 years. The new law also requires Citizens to
factor in purchase of reinsurance in figuring out rates, though the agency
does not purchase its own coverage like large insurers do.
Ross said those provisions are the same that private insurers must meet,
and only by forcing Citizens to set rates the same way can private
insurers offer competitive coverage in the state.
Gov. Bush, who leaves office on Jan. 2, has provided some direction with a
task force that recommended more than 50 changes in state policies and
laws in an attempt to revive an insurance market disrupted by eight
hurricanes hitting the state in 2004-05 and resulting in $36 billion in
But the special session likely will become the first real leadership test
of the new governor, Charlie Crist. Senate President Ken Pruitt, R-Port
St. Lucie, and House Speaker Marco Rubio, R-West Miami, reached an
agreement with Crist on calling the session.
Crist said "the discussion has not been extensive" between his
staff and legislative leaders, but the January session was the
"It's clear that the people need relief," Crist said. "We
don't want to wait until March."
During the campaign, Crist promised to force some insurers who offer only
car insurance in the state to offer property insurance as well if they do
so in other states.
Crist also promised he would force large national insurers to eliminate
their Florida-only subsidiaries, claiming they distort the market by
basing rates only on losses in Florida while they earn millions
Asked if he would push those topics in a January special session, Crist
said he wasn't sure.
"I respect the legislative process," said Crist, a former state
senator. "I know how important it is to form a good consensus."