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Politics

Crisis put GOP out of its element

Lawmakers say the expansion of Citizens is an aberration, born of the insurance crisis. Lawmakers veered from free-market solutions.

By JENNIFER LIBERTO
Published January 29, 2007

ADVERTISEMENT [AP photo] Gov. Charlie Crist, Port Charlotte resident Stan Whitney, who wrote Crist to complain about property-insurance costs, and House Speaker talk in the yard of Whitney's home as they celebrate the signing of the property insurance bill.

TALLAHASSEE - Of all the people with agendas who cornered state Rep. Jack Seiler during the Legislature's special session on insurance, there was one who hounded him more than anyone.

Gov. Charlie Crist.

The Republican governor and his staff kept after Seiler, a Broward County Democrat, and others in the Legislature to make sure a final deal on insurance included an expansion of the state-run Citizens Property Corp.

"Don't forget about Citizens," Crist told Seiler over the phone during that final weekend of negotiations. Then Crist asked Seiler to pass the phone to Republican Sen. Durrell "Doc" Peaden of Crestview, who was nearby, and Crist delivered the same message.

Last week, Republicans across Tallahassee strayed from conservative orthodoxy and teamed with Democrats to wedge state government deep into Florida's residential property insurance market.

They abandoned the ideal of free-market solutions in two ways: by voting to have state government assume a larger share of risk for hurricane damage so private insurance companies can lower premiums, and, as Crist urged, by broadening the mission of Citizens to make it a direct competitor to private insurers.

Crist said Saturday he saw no contradiction for Republicans. Insurance has always been a regulated industry, but had not been regulated well, he said. Now it will be regulated well, he said.

Yet despite nearly unanimous support for this approach only two lawmakers voted against the legislation, no one predicts a similar direction on other issues.

"This isn't the usual way that I'd personally want to see us go, but it's unusual times, prices are skyrocketing and it's having an effect on everyday life for Floridians," said Rep. Ray Sansom, R-Destin, who led House negotiations on the insurance fix.

The Senate's chief negotiator, Bill Posey, a Rocklege Republican, said his philosophy shifted toward getting the government involved last summer. He said he concluded Florida's insurance crisis was akin to a famine, of sorts.

"Are you going to help feed people, or just say: 'Aaaah well, the voluntary market will take care of that, let's let economics work,' " Posey said at the bill signing ceremony in Tallahassee on Thursday morning. "A lot of people starve to death if you let that happen."

Reinforcing the notion that insurance was an exception to the GOP rule, is the way Republicans have begun to attack the other major issue of the year: runaway property taxes. The rhetoric has been quite anti-government, with lawmakers accusing counties and cities of a "spending problem."

Crist says he wants to propose a spending cap.

"They're different issues. We certainly don't have as much control over property insurance as we do property taxes," said Rep. David Rivera, R-Miami. "With property taxes, we're much more in line with our core philosophy against government expansion."

So, how did the insurance problem generate such a philosophical shift? After all, it was only last year that many of these same lawmakers tried to fix the insurance problem using an approach much more in line with conservative thinking: government incentives to attract more competition that would, in theory, allow the insurance market to right itself.

"It starts at the top with the governor," said Mark Delegal, an attorney who works for the state's largest private insurer, State Farm. "Jeb Bush had more of a pay-now approach, but Charlie Crist prioritized rate relief now, which forces a pay-later approach."

Much of the Legislature's final product this year reflects the populist ideals that Crist championed last summer on the campaign trail.

Some senators say they started to adjust their thinking last summer, too, as they watched insurers file for rate increases and heard their constituents scream.

William Stander of Property Casualty Insurers Association of America said the stream of rate hikes might have prompted lawmakers to react in the way that they did. Stander, however, is quick to defend insurers' rates as a necessary response to hurricane expenses and increased regulation that made Florida a tougher place to do business.

"So we started nonrenewing folks who are the highest risks and look(ing) at what we've been charging," Stander said. "Maybe we went a little far along that line; that's our bit of blame."

Sen. Jeff Atwater, R-North Palm Beach, a leading proponent for making Citizens more competitive with the private market, said he met with insurers all summer and questioned their rate hikes, which prompted him to consider new kinds of insurance fixes.

"I asked them to provide me a rationale that the course we were on is sustainable, and they couldn't," Atwater said.

The idea of more government intervention was a tougher sell in the House, especially on the concept of expanding Citizens.

Yet, the concept was not foreign. A week before the special session started, Speaker Marco Rubio unveiled the House plan, which embraced some of the most dramatic anti-private industry provisions to have come out of that chamber in more than a decade.

House members wanted to ban new Florida-only subsidiary insurers, an idea that failed, and require auto insurers that offer property insurance elsewhere to write Florida homeowners policies, an idea that made the final bill.

But Citizens was a different matter, one that many House members wanted to tackle in the regular Legislative session that starts in March. But the governor pressured them too.

In the end, Sansom said he still doesn't know if he likes the idea. But he said he's glad the House tempered some of the zeal for making Citizens too much bigger. And he said the House plans to keep an eye on Citizens.

"Government might have been more of a solution than we would have liked," Sansom said. "Hopefully, it's on the short-term basis."

Times political editor Adam C. Smith contributed to this report. Jennifer Liberto can be reached at jliberto@sptimes.com or (850) 224-7263.

[Last modified January 29, 2007, 00:31:58]