Special session produces bill, relief

Article Courtesy of The Palm Beach Post

By S.v. Date, Michael C. Bender And Dara Kam
Published  January 23, 2007

TALLAHASSEE Gov. Charlie Crist declared a quick first victory Monday when the legislature finished a special session by preparing a bill designed to cut property insurance rates and let state-run Citizens start competing with private companies.

"They said it couldn't be done. Remember?" he said in the Capitol Rotunda, which was filled with applauding lawmakers and staff. "Yet here we are."

What happens next

March 1:Insurance companies' top officers must start certifying, under penalty of perjury, that their companies' rate filings are true.

March 1: Citizens Property Insurance Corp. must present to the governor,Cabinet and Legislative Budget Commission a 'business plan'showing how it will write multiperil policies in high-risk coastal areas that would save policyholders at least 10 percent in premiums if they choose to buy the combined policy.

June 1: Rate reductions required of private insurers, because policies renewed after this date have to reflect the lower cost of reinsurance provided by Florida.

Jan. 1: Insurers writing property insurance in other states but not Florida would be barred from writing auto insurance in Florida unless they start offering property insurance here.

Jan. 1: Citizens required to make an actuarilysound rate filing, which probably will result in a rate hike.

The last piece in the puzzle came overnight, after the Sunday deal between House and Senate leaders had been announced, when Crist was able to cajole House leaders into accepting his demand that Citizens customers no longer be forced to accept private policies that cost more than their Citizens premiums.

Under Crist's insistence, lawmakers on Monday included a stipulation to let homeowners remain with Citizens unless they choose to buy a private policy. Included in a related section was a provision that allows a homeowner anywhere in the state to buy a Citizens policy if the only private insurance is priced at least 25 percent higher.

They were the final loose ends in the bill.

"Once you're in Citizens, you can't be taken out, and that was important to the governor," said the chief House negotiator, Rep. Ray Sansom, R-Destin. "Unusual times call for unusual measures."

Rep. Adam Hasner, R-Delray Beach, who voted in favor of last year's industry-friendly law, declared Monday: "The crisis is not over today. But there is not an insurance lobbyist within 50 miles of the capital that supports anything we did in this legislation, and that's a good thing."

In fact, as the rotunda audience applauded Crist, insurance industry lobbyists did not - proof, Crist said, that the legislation was good for consumers. "If they were applauding, it wouldn't be good," he said.

State Farm spokesman Chris Neal said there were troubling aspects to the bill. He said both the state Hurricane Catastrophe Fund and Citizens run the risk of going broke again because they do not have enough money in reserve.

"Is it in the state's best interest for residents to have to pay major assessments when a storm hits?" he asked.

The bill passed Monday on votes of 118-2 in the House and 40-0 in the Senate. The only two representatives to vote against it were Republicans Don Brown of DeFuniak Springs and Dennis Ross of Lakeland. Both expressed 

skepticism about the way the plan relies on the state instead of the market to address the rate increases.

The bill could be signed as early as Wednesday by Crist. It represents a 180-degree reversal from the direction taken by then-Gov. Jeb Bush and last year's legislature, which approved a law that raised premiums on the theory that they were too low to cover the cost of storm damage.

"That was Gov. Crist," said Sen. Nancy Argenziano, R-Crystal River, a Crist supporter. "He came in and said: 'No, this is how it has to be.''"

Monday's 167-page bill - written mainly by legislators, staff and Crist's office, rather than insurance lobbyists, as has been the case in the past - was complicated, as insurance bills usually are.

"To say this is complex is really an understatement. To all of you who are asking what will the rates be, the answer back is, 'We really don't know.' Well, the truth of it is, we really don't. No one else does, either," said Senate Rules Chairman Jim King, R-Jacksonville, who attended the conference committee meetings throughout the weekend.

In the event of a catastrophic storm, even if lawmakers had done nothing to bring down premiums, "taxpayers - you and me and policyholders, whatever - will have to belly up to the bar and pay in order for us to meet our financial expectations," King said.

But, he said, "We have to do something. I don't think any of us can go home to our districts without some kind of relief. I can guarantee that, with this bill, there is relief."

Some Democrats, who began pushing for lower insurance premiums a year ago but did not find a receptive ear until after the November election in which they picked up seven House seats, complained that the law does not go far enough.

Rep. Susan Bucher, D-West Palm Beach, said the bill is "nibbling around the edges of the problem."

"I believe what we did was cosmetic surgery, when we needed to perform heart surgery," Bucher said. "I can't go home and tell people that we did a good job by offering them a single-digit decrease. But I guess this bill is better than nothing."

House Democratic Leader Dan Gelber of Miami Beach said some homeowners would view the reform as "disappointing and anemic."

"A lot of measures in this bill are things we introduced previously," Gelber told Democrats. "So it would not be fair for us to stand up here and say this is something we don't support. I think it's a good product.

"Many people will not get all the discounts other people will get, and we have to understand that. Some people will get meaningful discounts, some people - where I come from - simply will not. Even if we did an incredible effort and produced 20 or 30 percent discounts, it still would not be enough. Because, candidly, there are people who are making life decisions about their windstorm rates."