Who'da thunk it? Senate gets ideas
By HOWARD TROXLER
Published January 9, 2007
Good morning. If we could tear our attention away from the Gators game for just a second, there's slightly surprising news on another front.
One week from today, you might recall, the Florida Legislature convenes in Tallahassee for a special session about our state's insurance mess.
Here's the surprising part. There's now a draft available of the bill that the Florida Senate proposes to pass - and it does more than cynics like me figured those folks would be willing to do.
That big 55 percent rate hike for Citizens Property Insurance scheduled for March 1? Repealed.
Heck, they would even go back and repeal the previous Citizens increase, which just took effect on Jan. 1, make refunds, and freeze Citizens rates for the rest of 2007.
Citizens, the state's "last-resort" insurance company, would no longer have to have the highest rates around, and could have rates that are competitive with the private sector, under the Senate's bill. In a few places, Citizens could even sell other kinds of policies besides windstorm.
Policyholders could choose to take a higher deductible in exchange for lower rates. We could choose to exclude the contents of our homes from coverage. In some cases, we could choose not to insure against hurricanes at all.
Here's another new twist. For the first time, the Senate's bill does more than just cross Florida's fingers and hope that private insurance companies might, pretty please, reduce their rates.
Instead, the Senate bill requires insurance companies to make a new filing to lower the rate if they save from other parts of this law. For example, the state's catastrophic fund would kick in earlier, maybe saving them money.
There are lots more provisions. You can read the summary online: go to www.flsenate.gov. Click on "Committees" and get to the page for the Banking and Insurance Committee. There will be a link there to the bill and its summary.
Like I said, more than expected. Gotta hand it to 'em.
Having said that...
First, this is just a proposed bill. There are a lot of ways it could get changed in the coming days.
It could get changed in committee. It could get changed by the full Senate. It could get changed or even killed in the House.
Second, while this Senate bill provides some immediate relief for Citizens customers, it doesn't include two ideas that were cornerstones of Gov. Charlie Crist's campaign:
- Outlawing the practice by national companies of creating Florida-only, "pup" companies to segregate their risk.
- Requiring companies that sell other kinds of insurance in Florida to sell homeowners insurance here as well, if they sell it in other states.
Last, even the Senate's bill doesn't tackle head on the underlying problem: The private sector refuses to insure enough of Florida, and the public sector is being saddled with the worst risk.
We can fix our problem either in the private sector - letting rates rise freely until the market corrects itself - or in the public sector, creating a more stable and universal state-backed coverage.
What we have right now is the worst of both worlds. By allowing Citizens to compete and write new kinds of insurance, the Florida Senate's bill takes a step in the direction of a public-sector solution. But only a step.