Legislators clash, irate homeowners protest on opening day of session on insurance

Article Courtesy of The Sun Sentinel

By Linda Kleindienst, Mark Hollis and Kathy Bushouse
Published  January 17, 2007


TALLAHASSEE With homeowners across Florida demanding swift action, state legislators opened their emergency session on soaring property insurance rates Tuesday, but clashed immediately on how large a tab taxpayers should have to pay to help rebuild after a major hurricane.

Causing the early discord was a Senate plan that would place a $20 billion ceiling on what private insurance companies would have to pay policy holders to reimburse storm losses. Remaining claims would fall to Florida taxpayers, and would be paid for through a tax hike, cuts in the state budget, or a special fund.

The brainchild of Senate Democratic Leader Steve Geller of Hallandale Beach, the idea has been embraced by the Senate's Republican leaders and tentatively endorsed by Republican Gov. Charlie Crist, who has called the insurance crisis the most urgent problem facing his two-week-old administration. The theory is premiums will drop and competition increase if insurers no longer have to carry expensive reinsurance -- insurance coverage insurers buy to help pay claims -- to cover losses in the event of a catastrophe.

The proposal amounts to a bet that Florida won't experience another storm like Hurricane Katrina, which caused an estimated $40 billion in damage to insured property, anytime soon. The eight hurricanes that ravaged the state in 2004 and 2005, Katrina included, caused about $30 billion in damage. On Tuesday, Geller was urging action, warning that homeowners who have seen their insurance bills double and triple won't wait.

"Remember those old black and white movies -- Frankenstein -- where the villagers with the pitchforks and the torches were marching on the castle?" Geller said. "If we don't pass something to reduce insurance rates this week, they're going to march on Tallahassee. And you know something? We would deserve it."

But House leaders, Republicans and Democrats alike, are skeptical. House Speaker Marco Rubio, R-West Miami, said the Senate proposal "threatens to transfer significant amounts of risk on the backs of taxpayers," and couldn't be given due consideration until the Legislature's regular annual session starts in March. The House prefers to make it easier for private insurance carriers to tap the state's Hurricane Catastrophe Fund for lower-priced reinsurance, then pass along savings to consumers.

Despite the disagreement, most legislators said they are convinced they'll come up with some legislation at the emergency session, which ends at midnight Monday. "House members and senators understand the crisis we're in with this. The citizens of Florida have said, `You're going to get this done,' and that's what we're going to do," said Senate President Ken Pruitt, R-Port St. Lucie.

"We all have the same goal in mind. We want to reduce rates," said Rep. Ellyn Bogdanoff, R-Fort Lauderdale, one of the House leaders.

The legislators are under pressure from Crist, who campaigned last fall on the need for consumer-friendly legislation that would cut property insurance prices for all.

"Florida's homeowners are carrying the heavy load of property insurance costs," Crist said Tuesday. "This burden is weighing our people down with worry and harming our way of life."

The session began without much fanfare, although about 100 angry homeowners from Key West and the state's Gulf Coast showed up at the Capitol to prod their representatives. Wearing armbands of blue material that evoked the tarps that still cover roofs of hurricane-battered homes across Florida, they sat in committee meetings and scurried around the Capitol to meet with local legislators.

Clayton Lopez, a Key West city commissioner and fifth-generation "Conch," or Keys native, told the House committee that "the very fabric of our community is unraveling" because of escalating premiums.

Terry Eibert, another Key West resident, said her Citizens Property Insurance Corp. premiums jumped from $3,000 to $10,000 a year for $250,000 of coverage. Citizens is the state-backed company that takes policies dropped by the private market.

The full House and Senate are scheduled to meet again today to discuss and amend respective bills, with some predicting they could reach a deal as early as Friday. Options the legislators are mulling over include:

>Four-year ban on non-renewals

Stop private insurers from dropping policies for at least the next four years.

>Rate rollbacks

The 25 percent rate increase that took effect Jan. 1 for the almost 1.3 million residents insured by Citizens would be repealed. Customers who have already paid the increase would get a refund.

As of Tuesday, no bill had been introduced that would mandate a rate rollback for the millions of Florida homeowners who are insured by private companies.

>Tailor policies

Homeowners might be offered a smorgasbord of options to reduce their premiums but they would get less in exchange, and would have to pay a lot more out of their own pocket to fix storm damage. Among the possibilities are insuring only the house or condominium itself, and not the contents and allowing homeowners not to buy any windstorm coverage.

>Cherry picking and pups

Cherry picking is when insurers choose to sell more profitable policies, such as automobile coverage, but refuse to offer riskier homeowner policies. Private insurers could be forced by law to sell property insurance in Florida, if they offer such coverage in other states but only sell other kinds of insurance in Florida.