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Legislators consider loan plan for insurers

The program, still in the early stages, is aimed at bolstering Florida's residential insurance market.

By JONI JAMES
Published April 26, 2006

TALLAHASSEE - Days before state regulators took control of a unit of Poe Financial Group, the struggling Tampa insurer had pitched state Senate leaders on creating a low-cost loan program to help bail them out.

Senate President Tom Lee, R-Valrico, said Poe's direct pitch for cash failed, but the company planted an idea that is now under serious consideration by Senate leaders as a way to help shore up Florida's beleaguered residential insurance market.

Senate leaders are floating the creation of a low-cost matching loan program for insurance carriers who can show that the state dollars will help secure new private investment in Florida's market.

The concept is in its infancy, and its passage is far from assured. But with just nine days left in the legislative session, Lee said he and a handful of senators are quietly pushing the idea with House leaders in hopes of reaching an agreement by the May 5 adjournment.

A spokeswoman for Gov. Jeb Bush said his office has heard of the idea, but that it is premature to give an opinion.

"It may never see paper because we may not get comfortable enough with the concept ourselves," Lee said this week. "But we want to see if it could be another tool in our tool kit."

Lee said no decisions have been made about what kind of companies might benefit - including Tampa's Poe Financial Group - or exactly how the matching program would work.

Others familiar with the discussion say the state might loan insurers from $100-million to $500-million total.

And Lee said he'll still need to be convinced that the state has a good shot of being paid back in the event of another major hurricane season.

"The question very well may come down to what happens if we do this and the wind still blows?" Lee said. "We haven't answered that yet."

The potential subsidy for private carriers comes as both chambers negotiate an omnibus property insurance overhaul plan to relieve Florida residents from possibly paying more after a major hurricane.

Citizens is the state-backed insurer of last resort. And with each homeowner's or windstorm policy dropped by a private carrier after the 2004 and 2005 hurricanes, Citizens has grown, increasing the financial risk for all Florida property insurance policy holders.

Citizens now covers more than one in five Florida homes. Unlike a private insurer, it has no private capital to fall back on when claims exceed premiums collected, as happened in both 2004 and 2005.

The result, under law, is an assessment on all Florida property insurance policy holders, regardless which company holds their policies.

State legislators are expected to spend $750-million to $920-million of tax dollars to offset next year's assessment, but policyholders will still have to pay at least $800-million more on top of any other insurance premium hikes.

"Poe got me thinking," said Lee, who met last week with former Republican Gov. Bob Martinez, one of Poe's Tallahassee lobbyists.

"Does it make sense to use (state) money instead to attract private insurance capital into Florida so at least the risk is spread around rather than spend another billion dollars next time on a (Citizens Property Insurance Corp.) bailout?"

Lee said Poe's considerable political ties haven't played a role in the discussion and that his initial discussions with Martinez "didn't go as Poe hoped."

Poe-related companies and officers have donated at least $38,450 to political campaigns in the 2006 cycle, according to the state Division of Elections.

The biggest beneficiaries have been $28,500 to the Republican Party of Florida; $1,500 for Lee's bid to become the GOP nominee for chief financial officer; and $1,500 for current Chief Financial Officer Tom Gallagher's bid to win the Republican gubernatorial nomination. Also receiving donations are two statewide Democratic candidates: $500 for U.S. Rep. Jim Davis, who is running for governor, and $250 for Alex Sink, the Democrat's CFO candidate.

Joni James can be reached at 850224-7263 or jjames@sptimes.com

[Last modified April 26, 2006, 04:34:27]