Session on insurance crisis called
Legislators foresee only short-term solutions

Article Courtesy of The Ocala Star Banner

Published  November 30, 2006


TALLAHASSEE - Gov. Jeb Bush calls the lack of affordable property insurance "the biggest threat to our economy."

But when lawmakers meet in a special session beginning Jan. 16 to deal with the crisis, most don't expect any dramatic solutions to emerge.

Legislative leaders say because of the complexity of the issue, as well as philosophical differences over how much of a role state government should play in the insurance market, they are likely to try to reach agreement on handful of issues offering some immediate relief to homeowners and business, but are not likely to look at a comprehensive plan.


"Are we just going to do the easy things now, or are we going to try for the full comprehensive solution?" asked Sen. Steve Geller, D-Hallandale Beach. "The full comprehensive solution & it is clear to me & will require a greater role for Florida in assuming some of the risk."

But Geller admits that a broad approach is likely to run into opposition from Republican legislative leaders, particularly in the House, where lawmakers argue that the state should lessen and not increase its role in the volatile insurance market.

Rep. Dennis Ross, R-Lakeland, who has played a key role in crafting insurance legislation in recent years, is among the House leaders who believe a "free market" approach is better for insurance rates in the long run.

He objects to suggestions that the state needs to back off a plan that would require the state-run Citizens Property Insurance Corp., which has become the largest insurer in Florida, to raise its rates by an average of 56 percent, beginning March 1.

Setting rates lower "than what the market will bear doesn't solve the problem at all," Ross said.

"I would characterize it as being a free market versus government-supported solution," he said. "That's the crossroads we're going to find ourselves at: to what extent does government insert itself in this solution."

Joe Gorman, president of The Villages Property Association, said the insurance crisis was the focus of one of his organization's recent meetings.

"A lot of our members are super concerned about this," Gorman said.

Fears of skyrocketing premiums or lack of
coverage are more prevalent among those


Here are some of the issues lawmakers could take up in a special session on property insurance that will begin Jan. 16:
  • Make it easier for property insurance companies to acquire reinsurance from a state hurricane catastrophe fund. If the companies can get cheaper reinsurance from the state, it should result in lower costs for the companies and lower premiums for consumers.
  • Revamp a new state law that resulted in the state-run Citizens Property Insurance asking for a 56 percent rate increase for homeowners and more than 600 percent increase for commercial policies.
  • Eliminate financial barriers for foreign reinsurance companies, allowing them to compete with domestic companies in providing backup insurance funding for Florida insurers.
  • Enhance hurricane mitigation programs, including requiring insurance companies to offer specific discounts to homeowners who "harden" their homes against storm damage.
  • Allow homeowners to take more risks with their policies, such as opting not to have windstorm coverage or only covering the portion of their home that has a mortgage on it. Another option would allow higher deductibles.

who own mobile homes in older sections of The Villages, Gorman said.

"It's especially hitting people hard in the historic section of The Villages," Gorman said. "People have really been almost frightened."

Ross said there are "so many components to insurance reform" that it's likely only a few issues where there is general agreement" would be addressed in January. He said those might include increased funding to harden homes and mitigate possible losses in hurricanes, as well as changes to make it easier for insurers to access funds in case of catastrophic damage.

He bristled at talk of allowing Citizens to re-evaluate its rate plan.

"I don't want to look at it, but I'm sure it's going to be considered," said Ross, saying that "I take offense" to the agency's refusal to adjust its rates to allow a freer market.

"We say, 'This shall be done,' and then the agency or department says, 'We're not going to do that.' I have some grave concerns over that," Ross said.

Citizens has announced plans to raise rates by 56 percent or more for homeowners, blaming a provision in a new law approved earlier this year that requires the agency to base its rates on damages wrought by a storm that would occur every 100 years. The new law also requires Citizens to factor in purchase of reinsurance in figuring out rates, though the agency does not purchase its own coverage like large insurers do.

Ross said those provisions are the same that private insurers must meet, and only by forcing Citizens to set rates the same way can private insurers offer competitive coverage in the state.

Gov. Bush, who leaves office on Jan. 2, has provided some direction with a task force that recommended more than 50 changes in state policies and laws in an attempt to revive an insurance market disrupted by eight hurricanes hitting the state in 2004-05 and resulting in $36 billion in insurance losses.

But the special session likely will become the first real leadership test of the new governor, Charlie Crist. Senate President Ken Pruitt, R-Port St. Lucie, and House Speaker Marco Rubio, R-West Miami, reached an agreement with Crist on calling the session.

Crist said "the discussion has not been extensive" between his staff and legislative leaders, but the January session was the "desired result."

"It's clear that the people need relief," Crist said. "We don't want to wait until March."

During the campaign, Crist promised to force some insurers who offer only car insurance in the state to offer property insurance as well if they do so in other states.

Crist also promised he would force large national insurers to eliminate their Florida-only subsidiaries, claiming they distort the market by basing rates only on losses in Florida while they earn millions nationally.

Asked if he would push those topics in a January special session, Crist said he wasn't sure.

"I respect the legislative process," said Crist, a former state senator. "I know how important it is to form a good consensus."