Lawmakers pass bill they say cuts property insurance rates

Published: Tuesday, January 23, 2007 at 6:01 a.m.
Last Modified: Monday, January 22, 2007 at 11:56 p.m.
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Hundreds of homes in the Port Charlotte area suffered extensive damage because of Hurricane Charley.

ROD MILLINGTON/Sarasota Herald-Tribune
TALLAHASSEE - Florida lawmakers ended their weeklong special session on property insurance Monday, declaring they have delivered rate relief to Floridians.
But it make take some time for consumers to figure out what exactly happened.
A wide range of rate cuts were bandied about by lawmakers. They said customers of the state-run Citizens Property Insurance could see their premiums cut by about 20 percent, while avoiding nearly 80 percent in rate hikes scheduled for this year. State Farm residential policyholders could see an average decrease of 19 percent in their windstorm coverage. Other private insurers could be offering windstorm cuts in excess of 40 percent.
The wide array of estimates left some lawmakers bewildered.
''How do we ever explain this to the public?'' asked Sen. Nancy Argenziano, R-Crystal River.
Others said the claims of rate cuts exceeding 40 percent may be overly optimistic.
''Let's be real when we say this is a double-digit rate decrease. That's raising expectations falsely,'' said Rep. Bob Allen, R-Merritt Island.
But GOP Gov. Charlie Crist, who provided the political muscle for the rate-cutting move, declared the session a success after the Senate voted unanimously for the bill and the House passed it 116-2.
''We are going to lower rates in a meaningful way and it's going to actually happen,'' Crist said. ''They said it couldn't be done and yet it is.''
Insurance lobbyists, who had feared the worst going into the session, appeared to have regained some ground and staved off what they considered some of the more draconian proposals. But they said the legislation was clearly a retreat from the ''free market'' philosophy that had dominated the Republican-led Legislature in recent years.
"I think we did lose,'' said William Stander, a lobbyist for the Property Casualty Insurers Association of America.
State Chief Financial Officer Alex Sink said the legislation will help consumers and its passage marks a significant shift in philosophy in the state capital.
''The balance of power has always been in the hands of the insurance companies and lobbyists,'' she said. ''If we saw one thing over this last week, the balance of power is back in the hands of the citizens.''
But questions remain how much the Legislature helped consumers like Guinevive Kilgore, an 83-year-old Pensacola woman who saw her annual premium rise from $1,000 to $5,000 and was cited by Crist in his inaugural speech as a victim of the state's insurance crisis.
Kilgore is now a Citizens customer. Under the legislation, she will avoid some 77 percent in rate increases that were scheduled for this year. She could be in line for a further 20 percent cut, depending on whether she accepts nonwindstorm coverage from Citizens.
But some lawmakers said the bill could have done more for Citizens' customers.
The bill ''doesn't go far enough and the truth is for some of the high-risk areas, they will see it as disappointing and anemic,'' said House Minority Leader Rep. Dan Gelber, D-Miami Beach.
He also warned that if lawmakers don't do more to limit Citizens' rates, increases ''will likely follow'' when the company's rate freeze is lifted next year.
If Kilgore had remained with State Farm, her former insurer, she would have benefited from a statewide average cut of 7 percent in overall property policies and 19 percent for her windstorm coverage.
Coastal customers, like Kilgore, would likely see a greater actual decrease in her rates as compared to inland State Farm policyholders, said Justin Glover, a company spokesman.
However, the rate relief could cost consumers in the end - since the state is accepting a huge amount of financial risk in order to drive down property insurance costs in the hurricane-prone state.
The state will potentially double its Hurricane Catastrophe Fund to $32 billion and will greatly expand the role of Citizens, the state-backed insurer which now has 1.3 million customers.
But if the catastrophe fund is tapped into and Citizens runs up a deficit - as it did during the hurricane seasons of 2004-05 - state taxpayers and other insurance policyholders will have to pay.
The bill for the first time holds auto policyholders responsible for paying off Citizens' debt. That looming financial risk was the primary reason Rep. Dennis Ross, R-Lakeland, was one of two lawmakers who voted against the bill.
''While I understand and appreciate the great political pressure to provide immediate insurance rate relief, I cannot accept such short-term relief when it comes at an even greater, long-term risk to our homeowners and taxpayers,'' Ross said in a statement.
On the other side, some consumer advocates said the measures don't do enough.
Bill Newton, executive director of the Florida Consumer Action Network, said he's even considering asking Crist to veto the insurance bill.
''We could have had so much more,'' Newton said. ''We were seeing much higher saving numbers early in the week and kind of got our hopes up. This just is not enough.''

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