Crist berates insurance company 'profiteering'
Published: Tuesday, January 9, 2007 at 6:01 a.m.
Last Modified: Tuesday, January 9, 2007 at 2:37 a.m.
TALLAHASSEE - Gov. Charlie Crist's distaste for insurance companies is so fervent that he sees evidence of their ''profiteering'' even in college football games.
Crist pounded the industry Monday morning, telling reporters that he's not sure he trusts the insurers to set their rates fairly. He also said a recent move by State Farm to lower rates by 20 percent in California was evidence that similar cuts should be possible in Florida.
''Insurance companies are making extraordinary profits,'' Crist said, saying they made a profit of $60 billion nationally last year. ''I'm a little skeptical about this business.''
The new governor sounded like a Clint Eastwood movie character as he promised to pressure the industry to lower rates.
''Big insurance has a new day coming,'' Crist said Monday morning.
Crist said Allstate paid to sponsor the Sugar Bowl, played in New Orleans this year between Notre Dame and Louisiana State.
''That tells you something about how well this industry is doing, how profitable it has been,'' Crist said. ''I'm all for making a profit, but I'm not for profiteering on the backs of Floridians at a time of need.''
Lawmakers are set to meet in a special session next week to address exploding property insurance rates that threaten to make living in the state unaffordable for many Floridians.
In his inaugural address, Crist mentioned a Pensacola retiree whose insurance rates have gone from $1,000 to $5,000 annually. But he has yet to offer his own solutions for consideration by lawmakers.
Whether Crist's plain-talking populism holds up in the incredibly complex world of insurance regulation will be put to the test next week.
Barney Bishop is president of the Associated Industries of Florida, one of the state's most powerful consortiums of business and insurance companies.
He said Crist's ''entirely right to do and say what he's doing. We just respectfully disagree with him.''
Bishop said consumers aren't aware that all policy holders have to pay for a deficit in the state-run Citizens Property Insurance Corp. and a bankrupt insurer. He said any rate rollback in rates may be at least partially obscured by those new increases.
And he said that if lawmakers join Crist in supporting a repeal of new higher rates for coastal property owners insured by Citizens, that may mean higher rates for residents who live inland to make up the difference.
Bishop added that while insurers made about $2 billion in Florida last year, they still have to make up $13 billion in losses from the hurricanes of 2004 and 2005.
He said any moves that make it harder for insurance companies to make money in Florida may lead to their exit, leaving more policy holders getting their insurance from state-run Citizens.
''There's this popular idea that insurance companies have to do business in Florida,'' Bishop said. ''That's not true anymore. They can go some place else where their money will be better spent.
And Crist's rhetoric isn't rallying all lawmakers either.
''I have to disagree with the governor,'' said Rep. Ron Reagan, R-Bradenton, the chairman of the House's insurance committee. He said companies aren't ''profiteering,'' but merely trying to stay afloat in a hurricane-prone state.
Reagan, an insurance agent, said that criticizing insurers for having ''a good year because no storms hit makes no sense to me.'' Bishop acknowledged the tough political road for insurance companies hoping to explain that multi-billion profits may not translate into big rate reductions. ''It makes our job extremely difficult because Gov. Crist isn't the only one that's saying this,'' Bishop said.
Reagan said he's focused on helping insurers cover their own potential losses in storms by making it easier to buy reinsurance. And Reagan said it was important to make sure homeowners received ''meaningful'' rate reductions if they reinforce their homes to make them more hurricane-proof.
Democrats are poised to make political hay from the special session, saying that it will be a failure if large rate reductions aren't immediate.
Crist stopped short of such a promise.
''I don't want to get expectations too high,'' Crist said, ''but people deserve high hopes and I have them.''
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