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Lawmakers move toward rate cut deal

Early edition: State lawmakers made marked progress Saturday in resolving one of the two major issues they say will significantly lower property insurance rates.

By Tom Zucco
Published January 20, 2007


TALLAHASSEE — State lawmakers made marked progress Saturday in resolving one of the two major issues they say will significantly lower property insurance rates.

The House and Senate remain divided over how much potential debt the state should take on to cover widespread hurricane damage, something that could lower premiums now but leave the state vulnerable.

But on the other main sticking point — how to reduce rates for customers of Citizens Property Insurance, the state run insurer of last resort that insures nearly one in three Florida homes — both sides appear to be close.

House members tentatively agreed to a Senate proposal that would allow Citizens   to write all lines of insurance in its high risk, or coastal, account.

Citizens currently writes about 110,000 such policies, but only for customers who can’t get multiline coverage in the private market. For another 300,000 customers, Citizens writes only the wind policies, while private insurers write the far more lucrative fire, theft and other lines.

The move would make Citizens a direct competitor with private companies, something the insurance industry doesn’t like.

But the House wants  to require that Citizens undergo an extreme makeover. The House wants to place Citizens into a supervised corporate restructuring process for two years and develop a business plan that must include a rate reduction of at least 10 percent.

“Even though I’m not a fan of how Citizens manages itself,’’ said Rep. Dan Gelber, D-Miami Beach, “this gives the hope of a rate reduction.

Lawmakers earlier agreed to freeze Citizens rates at 2006 levels.

Still to be negotiated is the vexing issue of reinsurance — which is insurance for insurance companies.

The House plan would expand the state-backed Florida Hurricane Catastrophe Fund and allow insurers to buy more reinsurance more cheaply, with the savings passed on to policyholders.

The Senate would offer free state backup coverage, but only for catastrophic losses.

Both side are also closing in on a House proposal that would fire the Citizens board of directors, who were appointed by the former governor, chief financial officer, speaker of the House and Senate president.

“This is about publicity,’’ said Sen. Don Gaetz, R-Niceville, who opposes the firing plan.

In a sign that lawmakers want to come to a decision soon, early Friday evening Senate majority leader Daniel Webster, R-Winter Garden, asked his colleagues to remain in the conference room while House members recessed to discuss the Senate’s proposals.

House leaders responded by saying they would also remain in the conference room to talk out their differences.

Times staff writer Jennifer Liberto contributed to this report.