Crist talks tough on insurance,

demands ‘meaningful rate reductions’

Article Courtesy of The Sun Sentinel

By Mark Hollis
Published  January 12, 2007


TALLAHASSEE -- Issuing his prescription for Florida's insurance bills, Gov. Charlie Crist on Thursday said the state must get more deeply involved in the property insurance business to halt skyrocketing premiums.

Sounding optimistic, Crist praised legislators' plans for the special session they will hold on the issue beginning Tuesday. But he cautioned that whatever they pass must include substantial savings for homeowners shell-shocked by rate increases.


"You can be assured that we will have meaningful rate reductions," Crist said. "I'm not going to sign [any insurance legislation] unless it has that. But that's going to be easy because the House and Senate are already talking about ... rate decreases."

Crist proposed no specific legislation himself, instead outlining a set of key objectives to resolve what has become Florida's hottest political problem. Chief among the Republican governor's proposals: allowing Citizens Property Insurance more flexibility to offer lower rates and more coverage options so that it can go head to head with commercial insurance carriers.

"I want [Citizens] to be able to compete," Crist told reporters. "The more competition we have, the better off it is for the consumer. They'll have more options, more power, more choice. Their rates can be lower ... They'll no longer be the insurer of last resort."

The governor said he also approved of bills proposed in the House that would alter Citizens' claims-handling procedures and oust its current managers.

Current Citizens' customers could enjoy the most savings from the proposals Crist endorsed, but none of the ideas the governor hailed Thursday guarantees a rate cut for the four out of five homeowners statewide -- including about half of those in South Florida -- who purchase coverage from private companies.

House Republicans, however, predict their plan could lower the windstorm portion of homeowners' premiums by 25 percent, perhaps as early as the end of this year. Authors of the Senate proposal have predicted rate reductions of 33 to 40 percent.

Crist said he will insist that homeowners obtain big savings on their insurance bills. To achieve rate reductions, Crist and members of the GOP-controlled Legislature acknowledge they must turn their back on the conservative philosophy of less government intrusion in the private sector.

For instance, Crist said he liked the proposal, authored by Senate Democratic Leader Steve Geller of Hallandale Beach, that taxpayers pledge to cover some of the insurance claims in the event of a major hurricane, such as Andrew or Katrina, that can cause tens of billions of dollars in damage.

But some legislators, as well as lobbyists for private insurance companies, are opposed to making Citizens more like a private insurer, meaning some of Crist's ideas may get a rough reception at the special session.

"I don't believe that a super government-run insurance company is going to be satisfactory to the people," said state Sen. J.D. Alexander, R-Winter Haven. "If that were true, then we'd all be speaking Russian and not English."

Senate Republican Leader Dan Webster of Winter Garden said the ultimate goal was to make Citizens such a financially sound enterprise that it could be taken private.

"Our long-term goal is to turn Citizens into a marketable company so we can sell it," Webster said.

On Wednesday, House and Senate leaders rolled out bills that would freeze the rates charged customers of Citizens for a year, as well as offer private companies easier access to state-subsidized reinsurance.

The House package of bills seeks to reduce homeowners' rates by demanding that insurance companies that buy low-cost reinsurance from the state hurricane catastrophe fund pass the savings along to their customers.

In contrast, the rate reductions envisioned in the Senate bill would come about by having taxpayers shoulder the burden of compensating all hurricane damages greater than $20 billion, giving insurers a break that, theoretically, they could also share with consumers.

Webster said he and others are studying whether to alter their proposals to include provisions requiring private insurers to cut rates. But even without such assurances, Crist said lawmakers are on the right track.

"I could not be more pleased, nor could I shower more praise on the Senate leadership and the House leadership," Crist said. "I couldn't be more optimistic because of the dramatic steps that have been taken this week."

Included in the House bill are two ideas that Crist pushed on the campaign trail and which he repeated support Thursday. One requires companies to sell homeowners insurance in Florida if they provide other coverage, such as auto insurance. Crist has also pushed for the elimination of Florida-only subsidiaries of insurance companies that allow those companies to charge high rates in the state because of storm losses while their national parent companies make large profits.