Crist plan would cut homeowner's insurance rates by up to 25 percent

Article Courtesy of The Sun Sentinel

By Kathy Bushouse, Mark Hollis and Linda Kleind
Published  January 18, 2007

TALLAHASSEE Florida homeowners insured by private companies could see their property insurance rates cut 25 percent under a plan Gov. Charlie Crist delivered Wednesday to the Legislature's emergency session.

The governor floated his proposal as the House and Senate, in a rare display of bipartisanship, unanimously approved their respective plans to ease the growing financial burden of property insurance premiums. Those plans mandate price cuts only for homeowners with policies insured by Citizens Property Insurance Corp., the state-backed company providing coverage to anyone who can't buy it from a private insurer.

Crist lobbied individual legislators, pushing for a compromise that will give significant savings to all homeowners slammed with rate hikes as high as 400 percent after the disastrous hurricane seasons of 2004 and 2005. He also wants to ban private insurers from seeking another rate hike for two years.

"The people of the state are screaming [for relief]. They need it and they deserve it," Crist told reporters.

The governor campaigned last year on the need to deliver Floridians relief from high insurance prices and has vowed to veto any legislation that doesn't quickly provide it.

"The governor is very impressed by what [the Legislature] is doing but he wants meaningful, broad-based reductions," said 

Ingrid Wahling, of Port Richey, Fla., carries a protest sign as she arrives at the Florida Capitol to join in the protest over the high cost of homeowners insurance in Tallahassee, Fla.

George LeMieux, Crist's chief of staff.

The House and Senate signaled their readiness to repeal a 25 percent rate hike levied Jan. 1 on homeowners covered by Citizens, which insures about one-third of the houses and condominiums in South Florida.

When it comes to Floridians who buy coverage from private insurers, however, legislators have balked at mandating a rate rollback .

Instead, House and Senate leaders say other measures should result in a drop of between 25 and 40 percent in everyone's homeowner insurance rates. Most of the savings, leaders contend, would come from the state selling reinsurance to insurance companies at below-market prices.

Crist's proposalwould require the private insurers by March 1 to show the state how they are providing 25-percent overall price cuts or a 40-percent rate reduction for the windstorm portion of premiums, for all policyholders. Mandating these substantial and immediate rate cuts is the final ingredient Crist says is missing from the House and Senate packages, but one he thinks can be part of a final compromise.

"We're very interested in having a soft landing next week," said Crist, referring to the Monday deadline for legislators to finish the session. "If we don't, I wouldn't want to be going back home if I were them. So, I'm confident they'll do the right thing."

Justin Glover, a State Farm spokesman, the largest private insurer in Florida, said his company would probably oppose any legislation forcing lower rates.

"We would oppose mandates as anti-free-market and barriers to allowing new companies writing more [insurance] policies," Glover said.

Crist was also backing a plan approved by the Senate on Wednesday that would limit to $22 billion the combined liability of all private insurance companies doing business in Florida, if a major storm were to hit the state. Florida taxpayers would then cover up to an additional $23 billion in losses to insured property.

Senate leaders say a storm causing $45 billion in damage is highly unlikely, since Hurricane Katrina caused about $40 billion in damage to insured property and the 2004 and 2005 hurricane seasons combined were responsible for about $36 billion of losses in Florida. They are also counting on federal help if losses would exceed $45 billion.

By capping insurers' liability, the Senate assumes more insurers will do business in the state, and that increased competition and lower rates will result.

The House is moving closer to the Senate position with a proposaldesigned in part by Rep. Jack Seiler, D-Wilton Manors, to allow the Florida Hurricane Catastrophe Fund to expand to almost $30 billion so that more low-cost back-up insurance is available to private insurers. Unlike the Senate, however, the House would not have taxpayers reimbursing insurance claims if storm damage exceeds $20 billion.House Republican leaders produced documents claiming that the proposal would reduce total residential property insurance premiums by up to 38 percent.

House and Senate conferees could begin meeting today to iron out differences and negotiate with Crist..