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Lawmakers agree on insurance deal

A proposed $140-rebate for all homeowners was dropped in favor of a reduction of Citizens' deficit from the 2005 hurricanes.

By JONI JAMES
Published May 6, 2006

TALLAHASSEE — Florida lawmakers approved sweeping changes to the state's insurance laws just before midnight Friday, with an aim toward encouraging more private companies to return to the state's hurricane-riddled market. But the plan also assures higher premiums for many property owners.

The legislation, subject to touch-and-go negotiations that threatened throughout the day to push the annual 60-day session past Friday's deadline, writes substantial new rules for setting insurance rates and includes $715-million to bailout Florida's insurer of last resort, Citizens Property Insurance Corp.

In a sign of just how volatile the final hours were, a deal struck by leaders Thursday night that included a plan to send $140-rebate checks to homeowners was defeated in a floor vote before lunch on Friday.

The legislation scrapped the rebate idea in favor of the more straight-forward bailout of Citizens, the state-backed company that provides coverage for homeowners who can't find coverage on the open market.

The frantic negotiations capped a final, rocky week in the Legislature where partisan lines in the Senate blurred on a handful of major issues. But by dinnertime, legislators had passed a final flurry of bills including a $71-billion state spending plan for 2006-07 and a repeal of the liquor-by-the-drink tax in 2007.

Gov. Jeb Bush, opting to go home rather than wait out the final hours, toured the Capitol rotunda about 7 p.m., telling reporters he was pleased with his eighth and final legislative session, despite setbacks on two key education issues.

"I'm glad I had a chance to be able to have a bold agenda, and have leaders that I could work with who shared that agenda to accomplish a lot," Bush said.

The GOP-led Legislature let stand an earlier Senate vote that denied Bush's request to put a measure on the November ballot seeking voter approval of state-paid private school vouchers.

Last week, another bipartisan vote in the Senate also killed Bush's proposal to ask voters to repeal the 2002 class-size reduction mandate.

On the final day of the session, signs of the approaching election season were obvious. House members got cold feet on the issue of whether to tinker with term limits and joined the Senate in voting to strip from the November ballot a proposal to extend term limits from eight to 12 years.

But the lower chamber rejected Senate President Tom Lee's call for new limits on lawmaker-controlled fundraising committees, assuring the so-called soft money fundraising accounts will play a significant role in November's elections. Also approved was a statewide energy policy that will make it easier to build nuclear power plants and a bill allowing local governments, subject to voter approval, to add a $2 per day tax on rental cars. Bush has suggested he may veto the measure.

It was Bush and Lt. Gov. Toni Jennings who informally announced that a new deal had been reached on overhauling Florida's insurance market. But it would be hours before any printed version of the legislation surfaced, leaving insurance lobbyists and legislators alike debating whether the deal, transmitted orally from person-to-person, would hold. The Senate finally took up the bill (SB 1980) about 10:30, finally passing it 22-16 half an hour later. The House voted 77-39 shortly after.

Key to the agreement, negotiators said, was a decision to scale back a plan to begin setting rates for all Citizens policies based on the same 100-year storm cycle used by nearly the entire private insurance industry. Under that system, insurance companies collect a premium large enough to pay claims on the most severe or once-in-100-years storms. For Citizens to do so would have certainly meant sharply higher premiums, but the compromise involves phasing that standard in over several years.

The agreement also made significant retreats on what had been a key component of both chambers' original insurance proposals: Charging Citizens policyholders with non-homesteaded property or million-dollar homes more for premiums and any post-storm assessments.

Under the new plan, it appeared those groups would be treated differently from other Citizens policyholders only if Citizens runs a deficit. In such a case they could face a 20-percent assessment while all Citizens property holders pay a 10-percent assessment to settle the debt. If that doesn't generate enough cash, only then would all property insurance olicyholders in the state be assessed, as is the current law.

Also still hit hard under the plan are owners of second or vacation homes, as well as owners of $1-million homes that must rely on Citizens, the state-backed insurer that provides coverage when there is none available from the private market. Such homeowners will face not only a surcharge on annual Citizens premiums but also higher assessments when the company faces a deficit. Plus, the proposal will prohibit coverage of $1-million homes in Citizens windstorm pool in the future, likely 2008.

Senate negotiator J.D. Alexander, R-Lake Wales, who had pushed hard for raising all Citizens rates to the 100-year rate, said the retreats were necessary after lawmakers got last minute information of Citizens of what it could mean for property owners.

"We are trying to strike the balance between affordability and accessibility," Alexander said. "But we were looking at some rate increase I couldn't ask any of my fellow members to vote for."

Negotiators also agreed to scrap a plan pushed by Bush to mail a $140 check to each homesteaded Florida property owner.

First aired publicly Thursday, it came under immediate fire on the Senate floor because cutting and mailing the checks would have cost $4.7-million.

"My aide sent me an e-mail this morning telling me my phone in my district has been swamped all morning with callers saying 'Don't send me a check, pay down the Citizens' deficit,'" Sen. Mike Fasano, R-New Port Richey, said Friday afternoon after joining other senators in opposing the Thursday compromise. "I forwarded it to the Senate President and the Governor. People don't want this."

The $715-million will reduce Citizens' deficit from the 2005 hurricanes to roughly $1-billion, an amount that under state law will be assessed on all Florida property insurance policy holders.

-- Staff writers Steve Bousquet, Jennifer Liberto, Letitia Stein and Tom Zucco contributed to this report. Joni James can be reached at (850)224-7263 or jjames@sptimes.com

[Last modified May 6, 2006, 14:23:57]