Competing insurance plans to be reconciled
Published: Friday, January 19, 2007 at 6:01 a.m.
Last Modified: Thursday, January 18, 2007 at 11:45 p.m.
TALLAHASSEE — Florida lawmakers readied for a weekend of intense horse-trading as criticism of the state's gamble to lower property insurance rates faced new, bipartisan concerns on Thursday.
Legislative leaders have agreed on some general plans to meet Gov. Charlie Crist's goal of reducing property insurance rates by 25 percent. The centerpieces are a greater burden for the state in case of catastrophic damages from hurricanes and a repeal of rate hikes for customers of state-run Citizens Property Insurance that threatened a statewide average of more than 80 percent increases in premiums this year.
After perfunctory passage of competing plans, House and Senate leaders will meet through the weekend to reach agreement in time for a scheduled final vote on Monday to end the special session.
But the bipartisan agreement on the general need to cut property insurance rates was facing bipartisan concerns as well, both in and out of the state.
A chief target of attack was Crist's insistence that Citizens be allowed to not only sell policies to anyone in the state, but that their business be expanded to include more profitable policies like fire and theft in an effort to make money that would offset the debt-ridden property insurance field.
The company's public image has been resurrected miraculously this month. Just last year in the campaign, Crist blasted Citizens as a poorly run disaster that should be dismantled.
This week, Crist has said the company needs to compete on an even footing with private insurance companies.
"Let's face facts, we're in the insurance business now," Crist said Thursday morning. "Why not make it a company that can compete. I hope the private insurance companies aren't afraid of competition."
Senate leaders have agreed, saying that letting Citizens sell other lines of insurance would allow the state-run company to improve its financial health.
"If they're going to be in existence, they can't keep losing money," said Senate Majority leader Dan Webster, R-Orlando.
He said it wasn't fair to have Citizens assume the most volatile, costly risks in the windstorm coverage, while allowing private companies to pick up the more stable, lucrative coverage like theft and fire.
"We're trying to balance that," he said.
But with the idea just days old, House members said there's no need to rush into a drastic expansion of the state's involvement in selling insurance.
"Every time we've made major decisions in a shortened time period, there has almost always been a need to come back and make dramatic fixes," said House Speaker Marco Rubio, R-West Miami.
And the core conservatives that until recently held the philosophical soul of the House warned against creating "governmental monopolistic markets."
That was the concern of Rep. Don Brown, the DeFuniak Springs Republican who chaired the House insurance committee last year.
"I challenge anybody to point to an example of a truly successful government monopoly," Brown said, "and that is the path down which we will be headed if we continue to expand Citizens."
Chief Financial Officer Alex Sink, a Democrat, also advocated a slower move to expanding Citizens, saying the company should create a business plan for lawmakers to consider when the regular session convenes in March.
Sink was more pointed in trying to douse the rapid-fire hurry to cut rates by warning against any plans that would put the state on the hook in case of an historically severe storm season.
Lawmakers have agreed in general to assume more of the risk in case of severe hurricane damage, a move that should allow insurers to cut rates.
The Senate has proposed a plan that would cost taxpayers nearly $20 billion in case of a historical loss of $40 billion or more in the state. Sink said the plan "kind of gives me heartburn" since the potential of such losses would make it harder for the state to sell bonds for needed revenue in the future.
"We've got to do something that's going to make lives better for Floridians today," she said, "but not bankrupting the state down the road."
Sink said the House plan to sell coverage to insurance companies in case of losses up to $28 billion "has merit." But House leaders backed off of previous promises that their plan would save homeowners 30 percent or more on their property insurance rates next year, saying they needed to analyze the complex issue a bit longer.
Also entering the fray Thursday was an unusual combatant, former U.S. House Majority Leader Dick Armey, R-Texas.
Armey is the chairman of FreedomWorks, a business-backed group advocating conservative causes around the country.
In a letter to Crist, Armey warned that Crist's plans to consider national profits when setting rates for insurance companies' Florida-only subsidiaries "will only result in fewer choices and higher rates."
And Armey also said Crist's plan to force some insurers to offer property insurance in the state would have the "unintended consequence of encouraging insurers to leave the state altogether."
Crist maintained a campaign-like atmosphere in the special session, speaking with dozens of residents of the state's Space Coast who came to lobby for lower insurance rates.
Crist promised lawmakers, with a hint of warning, that voters will not forget what lawmakers do this week.
"People back home, when (lawmakers) go home, are going to tell them what they think and they will remember what happened here this week for a long time," Crist said.
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