By
TALLAHASSEE
-- Property insurers had a good year in 2006 -- a very good year. But as
insurance companies brought in billions of dollars in profits, Florida
homeowners and businesses saw their rates soar and, in many cases, lost
coverage.
Now, as state lawmakers enter the final
days of the annual legislative session, they are ready to debate a
controversial bill that includes targeting insurer profits.
The bill, pushed by Gov. Charlie Crist,
would prevent national insurers from setting up new subsidiaries to sell
property insurance only in Florida.
Subsidiaries already in Florida, such as
offshoots of State Farm and Allstate, would have to include information
about their parent companies' profits if they seek rate increases.
Senate Banking and Insurance Chairman Bill
Posey, R-Rockledge, said the measure is aimed at preventing insurers from
sending profits out of the state and then leaving a "shell here to
collapse" if a catastrophic hurricane hits.
But insurance-industry officials said the
measure could prevent private insurers from coming into Florida, because
they don't want to risk their national finances in the hurricane-prone
state.
Sam Miller, executive vice president of the
Florida Insurance Council, also defended the industry's profits. While
companies made about $2.75 billion in profits selling homeowners insurance
in Florida last year, he said, they lost a total of $15 billion as
hurricanes pounded the state in 2004 and 2005.
"If they don't make money in the good
years, they won't be around to pay their claims in bad years," Miller
said.
Senators are slated to take up a bill today
that deals with the subsidiaries and another Crist proposal that would
allow the state-backed Citizens Property Insurance Corp. to compete more
freely with private insurers.
The Citizens changes have drawn most of the
attention as lawmakers have debated the bill in committees. But the issue
dealing with subsidiaries reflects the frustration of many property owners
and lawmakers as insurance rates have soared.
Crist has tapped into that frustration,
regularly criticizing the insurance industry.
Last week, for example, he said the
industry is "very tenacious, and they are relentless."
"They work very hard, to their credit,
but not necessarily to the people's credit, to try to get an opportunity
to raise rates, to make more money," Crist said, "and they've
made a lot of money."
Factoring in property insurance and a
variety of other types of coverage, such as auto and workers'-compensation
insurance, companies nationwide made $63.7 billion in profits in 2006,
according to a recent report from the industry-backed Insurance
Information Institute.
Crist proposed cracking down on
Florida-only subsidiaries when lawmakers met in a special session earlier
this year to deal with insurance issues. But lawmakers did not ban the
creation of the subsidiaries, which are known in the Capitol as
"pup" companies.
Legislative staff analyses echo some of the
arguments of insurance-industry officials, with a Senate analysis saying a
ban on new pups "could limit the availability of residential property
insurance in Florida."
But Sen. Rudy Garcia, a Hialeah Republican
who is sponsoring the Crist-backed bill, questions the industry's claims
that national insurers would not come into the state.
"If
they would respond or make that statement under oath, then I would believe
it," Garcia said. |