Lawmakers agree to deal on rate cuts
By TOM ZUCCO, Times Staff Writer
Published January 21, 2007
TALLAHASSEE - State lawmakers were working out the final points of a deal late Saturday that could reduce insurance premiums on windstorm policies by an average of 25 percent statewide.
The rate reduction agreement was struck just before midnight, clearing one of two major sticking points in a special session to allow lawmakers to fulfill campaign promises.
The House and Senate agreed to buy up to $32-billion of reinsurance from the state-backed Florida Hurricane Catastrophe Fund. The program is tentatively planned to be in place three years.
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 appeared 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.
Late Saturday they were finalizing an agreement on the vexing issue of reinsurance - 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 sides 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.