Article Courtesy of The Sun Sentinel

By Linda Kleindienst, Kathy Bushouse and Mark Hol
Published  January22, 2007

TALLAHASSEE -- Key legislators reached a final compromise Sunday night on how to solve Florida's property insurance woes, and now the full House and Senate will vote on the plan Monday, the last day of a week-long emergency session.

Republican Gov. Charlie Crist gave a tentative stamp of approval to the bipartisan deal, reached after four days of intense talks between House and Senate negotiators.

Legislative leaders promised the plan will deliver rate relief to homeowners statewide who have been socked with soaring insurance premiums after two devastating hurricane seasons in 2004 and 2005.

Rate cut estimates for customers of private insurance companies range from 7 percent to 35 percent on the windstorm coverage in their policies. Customers of Citizens Property Insurance Corp., the state-backed insurer for homeowners who can't get private insurance, could see up to a 20-percent reduction in their premiums.

"There's going to be rate relief around the state," said Rep. Adam Hasner, R-Delray Beach. "For far too long the scales have been tipped toward the insurance industry, and I think our action has certainly put that in balance."

But others caution that only time will tell if the rate relief materializes as hoped, and whether homeowners are satisfied.

"This will be a success or failure on a family by family basis," said House Democratic Leader Dan Gelber of Miami Beach. "But we have stopped the hemorrhaging … and there won't be an obscene rate increase this year. That's a given.''

Legislators also caution that insurance price breaks will not come immediately. It'll likely be months before anyone sees rates drop.

"I know everybody wants it now but if they know the cavalry has been dispatched, they just have to hold the fort for awhile longer," Senate Democratic Leader Steve Geller of Hallandale Beach said.

Crist originally demanded mandatory across-the-board insurance rate cuts for all Florida homeowners. But by late Sunday he said he would accept "meaningful lower rates."

"Things look good. We are cautiously optimistic," said Crist, who spoke with legislative leaders late Sunday to discuss the final details of the package. "We are very hopeful relief will soon be on the way for the people of Florida … lower rates across the board, that's what I think we're going to see."

Asked if he would call legislators back if he doesn't like the final legislation, Crist replied, "Let's not anticipate such a negative view. But, yeah, I would."

The final compromise encourages Floridians to storm-proof their homes to get premium discounts. Homeowners could also save money by increasing their deductible, dropping windstorm coverage with approval of a mortgage lender or not insuring the contents of their home.

Here's a look at key details in the final compromise:

Citizens Property Insurance Corp.: The state's largest property insurer, with 1.3 million policies, is required within a month to submit a business plan to the state that shows how it would expand in the state's high risk coastal areas to offer fire and casualty coverage, as well as hurricane coverage. The profits generated are expected to help the company cut its rates by 10 percent.

Rates could drop by up to another 10 percent through a series of changes in the state Hurricane Catastrophe Fund, which provides reinsurance for the state's insurers to help pay claims after a major storm.

The bill also repeals a 21- percent rate hike that took effect on Jan. 1, and provides a rebate for Citizens' customers who have already paid that bill, and stops a 56 percent rate hike that had been scheduled for March.

Private insurance companies: Private insurers, which cover more than half of South Florida's homes and condominiums, would pass along savings to homeowners based on where they live.

State Farm has predicted it could cut windstorm rates an average of 17 percent statewide, which could translate into a 30 percent cut for South Florida homeowners, by getting access to cheap reinsurance through the state's catastrophe fund.

Justin Glover, a spokesman for State Farm Florida, the state's largest private insurer, said insurers aren't happy with all the changes in the compromise plan.

"There's a lot of anti-free market stuff in there. Our view is you should have less regulation rather than more … fewer things that drive up the cost for our consumers," he said.

As for when customers will see some rate relief, Glover said, "I would expect renewal to be the time at which you'd see savings."

Assessments: If Citizens runs out of money again after a hurricane, more people will pay for a bailout with an extra charge on their property, automobile, life, health and other insurance policies.

Under current law, only property policies are assessed a surcharge to help Citizens overcome a deficit. Only worker's compensation and medical malpractice policies will be exempt under the new plan.

While more people will pay, legislators say the amount will be smaller since the assessment base is broader.

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