Will lawmakers cut your insurance rates?
Property-coverage costs may not go down much, they say.

Article Courtesy of The Orlando Sentinel

Published  November 30, 2006


TALLAHASSEE -- Florida lawmakers said Wednesday that they will return to the Capitol in January for a special session aimed at fixing the state's hurricane-ravaged insurance market.

But don't count on lower bills just yet.

Lawmakers in the Republican-controlled Legislature already are warning that they might not be able to offer quick and significant help to Floridians buckling under the soaring cost of insurance.

"Is there anything we can do in a special session or regular session that is immediately going to cut rates by 30 or 40 percent? I don't think so," said Rep. Don Brown, R-DeFuniak Springs, an insurance agent and a House point man on insurance issues. "And I think people that would suggest that to you are being disingenuous."

Outgoing Gov. Jeb Bush on Wednesday sent lawmakers a 231-page draft of a bill that likely will serve as the centerpiece of the session, which will open Jan. 16 and is expected to last a week.

The proposal is based on recommendations from a task force headed by Lt. Gov. Toni Jennings. It includes provisions that would, among other things, offer insurance companies more publicly subsidized backup insurance, allow homeowners to forgo hurricane coverage entirely and boost spending on grants to help people shore up their homes against wind and water.

Far more uncertain is the fate of more-dramatic industry changes, including a push by lawmakers who represent coastal areas to limit huge rate increases sought by Citizens Property Insurance Corp., the state-supported insurance company for people who can't find private coverage, or a Democratic-backed proposal to make the state more directly involved in paying claims.

Democrats, who have been calling for an immediate special session devoted to insurance, insisted that much more is needed beyond Bush's plan in a state where eight hurricanes caused nearly $40 billion in insured losses in 2004 and 2005.

"It's really outrageous that it's December and we haven't yet addressed this issue meaningfully. How many homeowners, how many fixed-income seniors have lost their residences because of this?" said House Minority Leader Dan Gelber, D-Miami Beach.

Gelber added, "If they [Republican leaders] don't substantially lower rates, we will declare the session a failure."

Whatever the answer, the state's insurance problems need to be solved, said Joseph Rayborn, a Lake County resident and Citizens customer who said he now is paying $1,100 a year to cover his older mobile home on a canal.

"It seems like a rip-off," said Rayborn, 63. "Something's got to be done."

Brown, who is chairman of the House Jobs & Entrepreneurship Council, said Bush's proposals will serve as "something of a baseline from which the House and Senate can work."

Many of those measures already appear to have relatively broad support, though details still must be worked out. They include:

Allowing private companies to buy more, cheaper "reinsurance" -- that's insurance for insurance companies -- through a state fund. Insurance executives say soaring reinsurance costs on the private market are forcing them to raise their own rates.

Doing so, however, would increase the state's risk from another major hurricane or busy season. When the state fund is tapped out, almost all lines of insurance -- including property, auto and life -- are assessed to replenish it, a cost that companies typically pass on to consumers.

Requiring insurance companies to write "plain-language" policies that include details such as the amount of any premium increase due to higher rates and the amount due to coverage changes, the amount of an agent's commission, and any extra charges assessed by the state.

Expanding a state grant program to help people buttress their homes against hurricane damage, and ensure that insurance companies offer discounts to homeowners who do so.

Other provisions, however, likely will spawn far more debate and criticism.

Some consumer advocates, for instance, object to measures that would allow homeowners to go with less insurance. Ideas include allowing people to pass on windstorm protection while still purchasing coverage for fire, theft and other perils, or to buy only enough insurance to cover the remaining amount of a home's mortgage.

Insurance companies, meanwhile, oppose a plan that would allow Citizens to sell complete policies all over the state, rather than offering hurricane-only coverage while private insurers handle less-risky lines of coverage.

Still, even if lawmakers approve all of the changes, few people predict big reductions in insurance rates, particularly in the short term.

"There's literally nothing that we can do that would be like pushing a button and returning rates to where they were prior to the two vicious hurricane seasons," said Sen. Bill Posey, a Rockledge Republican leading insurance negotiations in the Senate. "There is not a silver bullet."

Others vow to push broader -- and more incendiary -- changes when the Legislature convenes.

Sen. Mike Fasano, a Republican from New Port Richey who represents the Gulf Coast from Clearwater to north of Crystal River, said he would file a bill to scrap key pieces of a law the Legislature passed last spring that ordered Citizens to seek massive rate increases.

The original law was designed to ensure that the public insurer is not competitive with private companies and that it has enough to pay claims after a hurricane without charging all Florida homeowners, regardless of whether they are Citizens customers.

"These provisions need to be repealed; otherwise we're going to have economic chaos in our state," Fasano said.

Democrats, meanwhile, will renew their push to have the state, rather than private companies, begin handling much of the windstorm-insurance industry throughout Florida. They argue that the state, with lower overhead costs and without a profit motive, would be able to charge far lower rates.

"The private market can't solve it all," said Senate Democratic Leader Steven Geller of Hallandale Beach.