Politics

South's governors echo Florida insurance woes

They say insurers are forcing states to step in with property coverage.

By JENNIFER LIBERTO, Times Staff Writer
Published August 27, 2007

BILOXI, Miss. - Governors of other coastal states are starting to sound a lot like Florida.

Near the second-year anniversary of Hurricane Katrina, Southern governors met on Sunday at a renovated casino hotel in a city nearly devastated two years earlier.

On the agenda: their states' continued struggles to find, keep and encourage insurers that will sell affordable homeowner policies.

A panel of insurance officials recommended that the states stop tinkering and allow the market to set their rates. But the governors of Louisiana, Mississippi and Alabama all said they're beginning to feel like they have no choice. They said they're increasingly sinking more taxpayer dollars deeper into the insurance business.

"I don't know a governor anywhere who wants to be in the insurance business, but I don't understand how we stay out of it," said Republican Gov. Bob Riley of Alabama, whose residents along 50 to 60 miles of coastline are hard-pressed to find any private insurance. "When you come in and say nothing is going to be available at any price, because it increases our exposure, then the states have no option."

Gov. Charlie Crist came to talk with the governors, just missing the panel due to a scheduling conflict, but he said he also heard similar complaints from other governors during a closed-door panel Sunday afternoon. "You get a sense of the frustration that my colleagues around the South are feeling, and they're looking for alternatives," Crist said.

Florida has become a polarizing force when it comes to property insurance policy. After years of holding the distinction of being the state to follow, Florida's recent policies have been criticized. They've been called "risky" and "knee-jerk" by Democratic Gov. Kathleen Blanco of Louisiana and Republican Gov. Mark Sanford of South Carolina.

They said they thought Florida took on too much risk when it expanded the state catastrophe fund, which provides cheap backup insurance for insurers. They also criticized Florida for allowing the state-run insurer to compete and grow.

Yet, at the Southern Governors' Association conference, those in attendance rattled off a long list of insurance problems, similar to those that have plagued Florida.

For example, Riley of Alabama and Republican Gov. Haley Barbour of Mississippi said that insurers refuse to write new policies in certain areas, forcing the state to pick up the riskiest property and not charge sound rates.

"No one is promoting a socialist system, but it's almost like the insurance companies want a semi-socialist system," Riley said.

While the governors are not willing to take the same road as Florida, they're acknowledging that government is increasingly being forced to fill in the gaps, because consumers need relief.

Blanco told insurers that while she understands allowing companies to charge what they want would bring more companies to her state, it also forces some residents to go uninsured. "From a company's perspective, reasonable rates are not necessarily equated to affordable rates," she said.

Coastal states continue to copy Florida on other types of insurance matters. Louisiana recently decided to follow Florida's lead in rejecting a controversial hurricane model that took into account issues like global warming in making predictions. Florida has a commission that studies and approves hurricane models, but Louisiana has no such group, so it took Florida's word for it.

Louisiana recently passed a law preventing insurers from dropping policies after a hurricane hits. South Carolina passed a law this year that says if insurers drop policies in the middle of hurricane season, they have to give more notice. Florida goes much further, saying insurers can't drop policies in the middle of a hurricane season.

"In the past everyone has looked to Florida, but that was before Florida went off on their own," said assistant professor Christine Berry of the University of Louisiana at Monroe. "Now we're still looking at Florida, but maybe with a little more caution."

Jennifer Liberto can be reached at jliberto@sptimes.com or 850 224-7263.

[Last modified August 26, 2007, 23:40:47]