Lawmakers start special session


Published: Wednesday, January 17, 2007 at 6:01 a.m.
Last Modified: Wednesday, January 17, 2007 at 12:00 a.m.

TALLAHASSEE — Trying to balance their desire to cut property insurance rates for consumers with the fear that the state may be setting itself up for a huge financial risk, Florida lawmakers began a weeklong special session Tuesday with many key questions on their insurance package yet to be settled.

The Senate is pushing an innovative, but untested, plan to shield insurers from the impact of a mega-hurricane — a measure that has not been embraced by the House.

The House wants to crack down on insurers by preventing them from setting up Florida "pup" companies and by banning "excess profits" — measures yet to be endorsed by the Senate.

Gov. Charlie Crist, who set the "pro-consumer" tone for the session, continues to inject new ideas into the process, including a proposal that would rename the state-run Citizens Property Insurance Corp., which has become a target for criticism because of steep rate hikes and a history of management problems.

Crist's newest proposals were part of the suggested legislative language released by his office this week that could be used by lawmakers.

Even in the legalese, Crist's disdain for insurers is plain, suggesting that there is a need to "prevent profiteering" by insurers and asserting that the companies are "unwilling or unable to provide affordable property insurance coverage in this state."

Among the proposals, insurers, with a few limits, would not be allowed to cancel policies for four years except in case of nonpayment of premiums. Neither the House nor Senate has endorsed that idea.

Just as lawmakers were kicking off their session, one grass-roots group was reminding the legislators just why they are spending January in Tallahassee.

Clutching signs with colorful handwritten protests such as "For Crist's sake, roll it back!" and "Sunshine State is now the foreclosure state — help us," about 60 angry residents rallied on the Capitol steps, hoping to push lawmakers to do whatever it takes to cut insurance rates this year and pass reforms that will help homeowners, not insurance companies.

The protestors passed out free peanut butter and jelly sandwiches to bystanders to emphasize the plight of Floridians suffering from high insurance bills.

"The peanut butter and jelly is a lot different than what the lobbyists are eating for the insurance companies," said Ginny Stevans, one of the event organizers.

Through a megaphone, the residents also shared familiar horror stories of their skyrocketing bills. Pasco County retiree Cecelia Johnson, 65, held a sign illustrating her plight in raw numbers: Her premiums have gone from $500 to $3,000 in the last five years, putting a heavy burden on her fixed income.

"If it gets any worse, we might have to leave," Johnson said.

Much of Tuesday's debate centered on a Senate proposal to limit insurance company risk in the case of a Katrina-like hurricane. The measure would obligate taxpayers to pay the reconstruction costs of any major storm above a set cost to insurers.

House Speaker Marco Rubio, R-West Miami, said it might be better for lawmakers to delay considering the Senate proposal until the regular legislative session in March.

He said the same of another Senate plan, favored by Crist, that would allow Citizens to offer policies in profitable areas like fire and theft coverage, thus allowing the state-run company to make more profit to offset the money-losing windstorm coverage.

Both plans would expand the state's role in the insurance business, a sticky prospect in the more conservative House.

"Any time you're talking about an idea that has the potential for dramatic liability on the shoulders of our taxpayers, we're going to spend more than seven days talking about it," Rubio said.

He said there was "95 percent agreement" between the House and Senate on other proposals and that discussing other ideas in a special session "injects an air of uncertainty that endangers the entire package."

In their debate, senators admitted they have had trouble getting hard estimates on what level is the right amount of risk to the state.

In the end, they agreed to force insurance companies to pay for all hurricane damage costs up to $40 billion or so, but said that was an "arbitrary number" that could change.

By capping insurance company risk, lawmakers hope they will encourage firms to lower rates. State Farm representatives said such a cap could lead to a roughly 33 percent cut in the company's windstorm rates.

But the gamble relies on predictions that Florida won't have another catastrophic hurricane season any time soon. Once that "big one" hits, it also relies on the idea that the federal government will pick up much of the tab.

The House Jobs and Entrepreneurship Council voted unanimously Tuesday for bills designed to reduce homeowners' insurance bills and revamp the swamped Citizens Property Insurance Corp.

Homeowners and consumer advocates urged passage of the laws, while insurance industry lobbyists warned of serious financial consequences if they are forced to do business in different ways.

The bill raising the most anger from the industry would require Florida-only insurers, the so-called "pup companies," to include their parent company profits when calculating rate hikes. Supporters say that will lower insurance premiums for Floridians.

Companies also would have to stop cherry-picking, the practice of offering high-profit lines like auto coverage without selling riskier property insurance.

Mark Delegal, a State Farm lobbyist, protested that large insurers already are spending more on claims in Florida than they take in with premiums.

"People of Iowa don't want to pay a couple hundred extra so Florida insurance is cheaper," he said.

The council was quick to recommend reforms for Citizens, which with 1.3 million policies has become the state's largest property insurer.

The measure would repeal a 25 percent rate hike that took effect Jan. 1 and freeze rates for the rest of the year. Citizens no longer would be required to be the highest-priced insurer in every market.

Lloyd Dunkelberger of the Tallahassee Bureau contributed to this report.

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