Insurance Reform Panel Submits 50 Suggestions

By JEROME R. STOCKFISCH The Tampa Tribune

Published: Nov 16, 2006

TALLAHASSEE - The state would give insurers easier access to its catastrophe fund and offer homeowners greater variety in the policies they buy under broad recommendations presented Wednesday by a governor's committee to reform property insurance in Florida.

The committee is handing 50 recommendations over to lawmakers and Gov. Jeb Bush, who are considering a special legislative session to try to stabilize the hurricane-battered property insurance market. "We have killed a lot of trees in this endeavor," quipped Lt. Gov. Toni Jennings, gesturing to a 4-inch-thick binder containing the committee's recommendations and support material.

Wednesday's meeting at the state Capitol brought unanimous approval of the recommendations by the Property and Casualty Insurance Reform Committee, made up of lawmakers, business leaders, bankers and other advisers.

It also exposed a divide between those pushing pro-consumer provisions and those who cautioned against alienating an already-spooked insurance industry.

Bush said Tuesday he won't call a special session if there isn't general consensus on an insurance strategy. "If there isn't, … then we will pass these recommendations and the work done to the governor-elect, and it will be dealt with," he said.

Charlie Crist, who takes the state's top office Jan. 2, said, "If it doesn't happen now, it will be Mission One of the Crist administration."

Panelists and the insurance heavyweights that served on its technical advisory committee agreed the major issue would be relief through the state's catastrophic fund, a $16 billion backstop that insurers can tap into after meeting certain damage thresholds. The worldwide private market for this "reinsurance" has been bailing out on companies writing policies in Florida pricing them out of the market, contributing greatly to the crisis here.

The committee wants to allow insurers to buy into a lower coverage threshold for the fund - paying more to tap the state money after incurring $2 billion or $3 billion in damages, for example, as opposed to the $6 billion threshold expected for 2007. The state charges pennies on the private market's dollar for such catastrophe coverage.

"There will be a savings that will be passed along to customers," said Sam Miller, executive vice president of the Florida Insurance Council.

The committee also wants to allow homeowners to buy policies without windstorm coverage, restrict coverage to the outstanding balance of a mortgage, choose deductibles of any amount in addition to the traditional 2 percent and 5 percent currently offered, and buy policies with no personal contents coverage. Jennings, the committee chairwoman, said consumers complained about mandated coverages. "We're going to make sure that choice is available," she said.

Lawmakers, consumer advocates and industry insiders were already grumbling about some recommendations. State Sen. J.D. Alexander, R-Lake Wales, a member of the committee, acknowledged there is "a challenging case to bring this together by Dec. 4," the likely start of a special session.

A discussion of something as seemingly innocuous as transparency in policies suggested that the consensus sought by Bush, Crist and state lawmakers is not given.

Among recommendations that hit opposition are: specifying how much a homeowner would save for strengthening a home; giving the dollar amount of an agent's commission; differentiating rate increases, coverage changes and assessments; and requiring "plain language" in policies.

"We need to be very careful mandating" such provisions, said state Rep. Don Brown, R-DeFuniak Springs. Existing insurance policy language resulted from a history of litigation, said Brown, an insurance agent. Simplifying it might sound good but result in unintended consequences, he said.

Reporter Jerome R. Stockfisch can be reached at (850) 222-8382 or jstockfisch@tampatrib .com.