Debate in Capitol over insurance rates turns tense

Article Courtesy of The Sun Sentinel

By Mark Hollis and Linda Kleindienst
Published  January 20, 2007


TALLAHASSEE Exasperated legislators traded barbs in the state Capitol late Friday night as key members struggled with how to slash annual premiums for customers of private insurance companies and state-run Citizens Property Insurance Corp.

Still, they hope to reach an overall compromise as early as today on legislation to ease the state's property insurance crisis.

A lead Senate negotiator sent a shockwave through the late-night talks, warning that House leaders must back off their objections to deeper Citizens' rate cuts. "We came forward an awful lot, but just one side moved," Senate Banking and Insurance Chairman Bill Posey, R-Rockledge, said.

House Republicans didn't flinch, insisting there's still plenty of time to forge an agreement.

"This isn't the 11th-hour," the top House negotiator, Rep. Ray Sanson, R-Destin, told reporters. "We have some time. They need to relax."

Gov. Charlie Crist kept close watch on the intense negotiations at the Capitol and urged legislators to ignore complaints by property insurance lobbyists that some proposals might too deeply cut the industry's profits.

Crist said the state's priority must be to make changes to insurance laws for Florida homeowners, not insurance carriers.

"This [insurance crisis] is affecting real people in a real way throughout the state," Crist said Friday. "I told them, they can count on us, and I mean it."

While House and Senate negotiators have settled most of their differences in this emergency session that started Tuesday, it still remains unclear how significantly Floridians will see their homeowner premiums trimmed. The money saved, and how soon it would reach people, is expected to vary based on where they live and which insurance company they have.

Potential annual savings for consumers, some of whom were hit by double- and triple-digit insurance price hikes after vicious storm seasons in 2004 and 2005, range from 23 percent to more than 60 percent, according to estimates floated by the House and Senate.

"Twenty-five percent for me is better than nothing," said Stephanie Mink of Boca Raton, who said her annual premium from State Farm Florida went from $3,000 to more than $12,000. "I would love to see more, but every little bit helps."

Other South Florida homeowners weren't happy their representatives didn't seem willing to give them a bigger break.

David Brindley of Plantation said his State Farm Florida policy went from $4,000 to $11,000, a rate that he brought down by raising his hurricane deductible on his homeowner policy to 5 percent and putting $15,000 in a bank account to cover his deductible should a hurricane hit the state.

"Luckily, I can afford to do that," Brindley said.

By early Friday evening, legislators agreed on several items as they worked toward wrapping up the emergency session Monday. One big issue resolved would allow homeowners to go without hurricane insurance, if they don't have a mortgage.

Another agreement would order an end to the so-called "cherry picking" by private insurance companies; Crist has derided this as anti-competitive. From now on, insurers that offer homeowner policies in other states, but only auto insurance in Florida, would have to sell homeowner policies in Florida, too.

Still on the negotiating table, though, were hefty issues, mostly dealing with whether to expand Citizens -- the state-backed property insurer and now the biggest with 1.3 million policyholders -- to allow it to sell broader policies and how deeply to cut its premiums.

Lawmakers are in agreement on repealing the Jan. 1 rate increase granted to Citizens and another price hike scheduled in March. But legislators said Friday they want to give Citizens' policyholders another guaranteed cut, perhaps of 25 percent. They were in sharp conflict, though, on how to do it.

A proposal by state Sen. Jeff Atwater, R-North Palm Beach, would abolish the requirement that Citizens buy back-up insurance -- reinsurance -- through the state's Hurricane Catastrophe Fund. The change would produce rate cuts of possibly 9 percent for most Citizens customers, Atwater said. But critics said it would leave a $500 million hole in the catastrophe fund, which helps insurance companies pay storm claims, and that might have to be filled with cash taken from the state's savings accounts.