Lawmakers Hit Ground Running

By JEROME R. STOCKFISCH and CATHERINE DOLINSKI The Tampa Tribune

Published: Jan 17, 2007

TALLAHASSEE - A series of homeowners insurance bills promising meaningful rate rollbacks are expected to hit the floors of both legislative chambers today as lawmakers dive into Day 2 of a weeklong special session.

With demonstrators rallying in the Capitol plaza and packing committee rooms on Tuesday's opening day, lawmakers in the House passed six bills out of three different committees that could provide rate relief of 25 percent to Florida homeowners.

A Senate panel was expected to follow suit today, shipping an expansive bill to its full membership. Its authors expect to save Floridians at least 33 percent on insurance bills.

Tuesday's moves demonstrated not only the Legislature's willingness to hit the ground running, but also suggested there is a substantial chasm between the chambers that will have to be bridged by a Monday night adjournment.

The Senate is advocating a state-backed "super reinsurance pool" that would cap insurers' exposure in megastorms. That strategy relieves insurers of having to obtain ultraexpensive reinsurance in the private market, which is driving up rates. It also put traditional market-oriented, antitax Republicans in the awkward position of defending a big-government solution that, in the case of an extreme catastrophe, could result in a tax increase.

"We're the free-market people here," Bill Posey, R-Rockledge, told his Senate Banking and Insurance Committee. "We're the ones who would lay our body down in front of the train to keep this from happening in any other circumstance. [But] the situation we're in now is that the free market cannot provide a solution that is affordable. If it's not affordable, it's not an option."

But the Senate proposal got a frosty response in the House, where Speaker Marco Rubio panned the prospect of taking it up anytime soon.

"We're not opining on its validity," Rubio said. "It's an idea that's five days old, and quite frankly it should be debated over weeks and months, not hours and days, which is what we have in a special session. I think it's an idea that really should be discussed during the regular session [because] it places a tremendous burden on the taxpayers of this state."

The Senate plan would leave private insurers on the hook for the first $6 billion in damage from a major storm. The state-backed Florida Hurricane Catastrophe Fund then kicks in until damage reaches about $16 billion. Under the Senate plan, the superfund would be responsible for losses of more than that.

Posey said Floridians could continue to pay exorbitant insurance rates for decades because of insurers' fear of "the big one," or the state could take on risk, which would keep rates lower and make Floridians pay only if such a storm hit.

On Tuesday, Rubio was equally averse to a Senate proposal to expand Citizens Property Insurance Corp. by permitting it to write multiperil policies and commercial coverage.

Both Want Increases Rescinded

The House's skepticism about Citizens was pervasive. On Tuesday afternoon, a House council approved a bill from Rep. Ellyn Bogdanoff, R-Fort Lauderdale, that would wipe out the public-private company's board of directors, to be replaced with appointees by the new House speaker, Senate president and governor.

"We want to shake [Citizens] up; it's a company with huge issues," Bogdanoff said in an interview. "We are not comfortable with expanding it; that's what the Senate wants to do. There's a discomfort level in the House with the way Citizens is functioning."

Bogdanoff said her proposal is meeting resistance in the Senate, however, because "the Senate is not interested in addressing the issue; they only want to address what reduces rates."

There is some agreement between the chambers, however. Both House and Senate bills would rescind the Citizens rate increase of about 25 percent, which took effect this month, and delete language from a law passed last year that would have required an additional 56 percent increase.

Both bills also attack the sinkhole problem that has plagued the Tampa Bay area by limiting what kind of damage merits compensation and how. The proliferation of frivolous sinkhole claims has been driving up insurance rates in counties such as Hillsborough, Hernando and Pasco.

Reggie Garcia, a lobbyist for an organization of trial lawyers, warned that restrictive provisions could effectively make it impossible for anyone to collect on a sinkhole. But Rep. Don Brown, chairman of the House Jobs and Entrepreneurship Council, said testimony during last year's session about the sinkhole problem convinced him the problem needs addressing.

Storms Targets Cherry-Picking

The House package would stop national companies from creating "pups," Florida-only subsidiaries insulated from parent corporations' profits and assets. It also would prohibit companies from "cherry-picking" the least risky and most-profitable lines, by requiring auto and other insurers that write homeowners policies in other states to do the same in Florida.

That approach is not in the Senate proposal, and an amendment by Ronda Storms, R-Brandon, to add an anti-cherry picking provision was rebuffed as the Senate tinkered with its bill.

The House is deferring largely to Gov. Charlie Crist on the issues of pup companies and cherry-picking, Rubio said. Crist circulated his recommendations for homeowners insurance last week.

Industry groups warned those provisions would serve only to chase insurers out of the market. Some lawmakers say such legislation would be unenforceable or perhaps face legal hurdles.

Both chambers also are interested in expanding insurers' access to the state catastrophe fund. Under the House bill, insurers would be able to tap the fund at $2 billion, down from $6 billion.

The Senate offers buy-in options that would provide smaller insurers a lower threshold.

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