The Florida Legislature will hold a special session in mid-January to address soaring homeowners and business property insurance costs, but don't bet on rates going down anytime soon.
A total solution to the complex issue is highly unlikely, but important first steps are possible, experts and legislators say.
First on the list should be fixing problems with interim legislation passed in May, said Sen. Mike Fasano, R-New Port Richey.
A last-minute change allowed massive rate increases for state-run Citizens Property Insurance Corp., Fasano said, setting the stage for private companies to follow suit.
The so-called fix, supported by Gov. Jeb Bush, was anything but, said Fasano, who voted against the bill.
"The homeowners are seeing no relief whatsoever" now, he said, despite widespread public outrage and calls for change. Fasano thinks Gov.-elect Charlie Crist "absolutely" will handle the crisis differently. Despite months of work by a special commission, however, "there's no doubt that a lot of work still has to be done," he said.
Stephen MacNamara, a former senior legislative staff member who now is a professor of communications at Florida State University, said the state commission run by Lt. Gov. Toni Jennings was "a face-saver for Jeb, who was unable to develop an agreement that would allow this to have been handled under his watch."
'You Have People Weeping'
Public outrage means lawmakers are all but certain to pass some changes, even if it's a relatively small package to start, said Bob Hunter, director of insurance at the nonprofit Consumer Federation of America and a former Texas insurance commissioner.
"You have people weeping at town hall meetings," he said. "That's very unusual. Something's going to happen."
Among the Jennings commission recommendations are continued state support for mitigation programs, which strengthen existing structures to better resist storm damage, and requiring insurance policies to break down cost increases, such as by specifying the commission earned by agents.
"There is no magic bullet" that will dramatically lower rates, said Sam Miller, spokesman for the Florida Insurance Council. Both expanding the state catastrophic fund and increasing mitigation funding should generate wide support and are likely to pass, he said.
The catastrophic fund offers substantially cheaper reinsurance for private companies, he said. Reinsurance is backup coverage that insurance companies buy to cover claims.
Mitigation Programs Called Helpful
Private reinsurance costs as much as 80 cents on the dollar, whereas the state fund costs less than a dime per dollar.
Each $1 million added to the mitigation fund could provide free inspections to 6,666 homeowners. The state could afford to cover inspections for virtually all Floridians who want one, but it can't afford to help every Floridian pay for the resulting home improvements.
"Mitigation programs can do a lot of good. No other state has made the commitment to that that Florida has," Miller said.
Hunter supports enhanced mitigation funding and inspections but says some other proposals, including a broadened catastrophic fund, amount to giveaways to an insurance industry reaping huge profit.
"It's not a giveaway," Miller said. "We are buying reinsurance that we have to get from one source or another. Every dollar we pay is passed on to consumers."
The Jennings commission also proposed moving some insurance oversight responsibility from the chief financial officer to the Florida Cabinet.
Democrat Alex Sink won the CFO seat, and promises of insurance reform figured heavily in her campaign.
Sink is concerned that removing the Office of the Consumer Advocate from the CFO will weaken accountability and ultimately confuse consumers.
"Floridians won't really know who is accountable," said her spokeswoman Tara Klimek, who said Sink will remain committed to monitoring the industry no matter what changes are made.
Posey In Pivotal Role
Sen. Bill Posey, R-Rockledge, is expected to play a key role in shaping any insurance legislation. He saidinsurance reform will be a long-term process shaped in part by external events such as how many major storms hit Florida each year.
Posey thinks a realistic political goal is short- and long-term rate stability and rate reductions in the future.
Constituent anger and business complexity at the heart of the insurance crisis, however, can cut two ways, MacNamara said. Crist, Senate President Ken Pruitt, R-Port St. Lucie, and House Speaker Marco Rubio, R-Miami, could use the special session as a chance to declare victory if even limited legislation is passed.
"It will take time to see the results, which is another reason Sink ought not to fight too hard for a place at the insurance crisis table," MacNamara said. That way, she can have some deniability and be in a position to play the blame game if competition isn't enhanced and rates don't drop significantly.