Insurance election shatters synergy

Candidates Tom Gallagher and John Cosgrove once worked together in the wake of Hurricane Andrew.

By JEFF HARRINGTON

© St. Petersburg Times, published October 29, 2000

For all Hurricane Andrew tore asunder in Florida in 1992, it briefly united a pair of unlikely allies.

Tom Gallagher and John Cosgrove.

The two veteran politicians, now duking it out in a race to become Florida treasurer and insurance commissioner, needed each other to rebuild the state's devastated homeowners insurance market after Andrew struck.

Gallagher, then the Republican insurance commissioner, and Cosgrove, a Democrat then in charge of the House insurance committee, joined forces on issue after issue. They created a catastrophe fund to help cover claims from the next big hurricane. They passed a moratorium to limit the number of Florida policies that storm-shy insurers could dump.

"Both were very courageous and very important in the leadership they showed after Andrew to get the market back," said Sam Miller of the Florida Insurance Council. "It wouldn't have happened without Gallagher, and it wouldn't have happened without Cosgrove."

It's safe to say times have changed.

In their bid to replace Insurance Commissioner Bill Nelson, Gallagher and Cosgrove have taken off the gloves.

Cosgrove portrays Gallagher as "a chameleon and a political opportunist." He calls for releasing records of past investigations into Gallagher's campaign contributions. He questions whether Gallagher wants the job and challenges him to come up with specific proposals for health care, auto insurance, and homeowners insurance.

"I have specifics and real ideas," Cosgrove said during a recent visit to the bay area. "I'm not just trying to run on ID."

Gallagher says that he has been "looked at, smelled at, investigated and checked out" without being charged with any wrongdoing or ethical violation. In lieu of a slew of specific proposals, Gallagher advocates working with the Legislature to solve problems.

"I could write papers up and make it look more consumer-oriented than his are. I could tell everybody I'm going to cut their rates 50 percent," he said. "I could do all those kinds of things, but they aren't real."

Comfortably ahead in the polls and at the fundraising trough, Gallagher pokes fun at Cosgrove for spending most of his war chest on commercials early on.

"Anybody that would spend $750,000 trashing his opponent and have no money left for the last three weeks of his campaign is (running) one of the dumbest campaigns I've ever seen in my life," he said. "They don't deserve to win."

Vitriol aside, the two candidates are kindred spirits in some ways.

On the issues: Both advocate either an overhaul or elimination of the windstorm pool, the state-run insurer for coastal residents who are required to have wind coverage. Both also are opposed to the three-member arbitration panel used to settle rate-setting disputes. Both speak with ease about depopulation programs, windstorm pool rates and workers' compensation reform. Both are steeped in Tallahassee politics, often toeing the moderate line. Both relish talking to schoolchildren in their spare time.

They took strikingly different paths, though, to their November showdown.

Cosgrove adopted homeowners insurance as a crusade when his Perrine home was destroyed by Hurricane Andrew. He has refused to let go of the issue. He urged fellow legislators to steer insurance measures his way even after he was bumped from the insurance committee in 1996 when Republicans took control of the House.

Gallagher's focus has been anything but singular. He hopped from insurance to private industry to his current job as state education commissioner. He had his sights set on the open U.S. Senate seat vacated by Connie Mack until GOP leaders asked him to run for insurance commissioner instead.

Gallagher acknowledges the job isn't his first choice but insists that doesn't affect his commitment. "This isn't a fun job; it's a tough job." Whoever is elected will wear several hats. As treasurer, he will oversee the state's bank accounts and pension funds. As a Cabinet member, he is part of a key policymaking group. He also assumes the role of state fire marshal.

The highest-profile and toughest part of the job is that of insurance commissioner. The regulatory role is a juggling act in keeping insurance rates as low as possible without alienating insurers to the point they will pull out of Florida.

It can be a thankless position, said R.Z. "Sandy" Safley, a former Republican state representative from Clearwater who once was chairman of the House insurance committee.

Safley toyed with a run for commissioner this year. The reason he backed off: "The fever broke," he said. "I came back to my senses."

Trade groups representing insurance companies and agents have been loath to endorse either man.

"Some (in the industry) do want to play both sides just to make sure whoever does get elected is someone they can say they supported," said Jeff Grady, president and CEO of the Florida Association of Insurance Agents, which represents 1,100 independent agents.

So far, Gallagher and Cosgrove have raised about $2.5-million between them for what will be a short-lived prize.

The position will be phased out in two years as the state shifts to a new Cabinet setup that combines duties of the treasurer and comptroller into a single position.

As the race moved into its final weeks, both candidates stopped in the Tampa Bay area for a round of fundraising, handshaking, speechmaking and meeting with the media.

From leader to playing catch-up

It's Friday the 13th and John Cosgrove has run into a spot of bad luck on the campaign trail.

He planned to stage a morning news conference, pulling over cars to check whether drivers had auto insurance. It was scrapped because he didn't have enough time to get clearance from the Clearwater police.

Meanwhile, organizers of a fundraising lunch say the turnout of about a dozen insurance agents is less-than-desired. Some speculate that fellow agents who quietly support Cosgrove stayed away for fear of alienating Gallagher, the front-runner.

Cosgrove is undaunted.

He casually pulls over a folding chair to use as a makeshift lunch table, nibbling on red beans and rice as he chats. Then he takes to the podium for the attack.

He gets in several digs on his opponent ("My thought is when you run for everything, you stand for nothing") before moving on to the main course: his proposals to get rid of the windstorm pool, create a prescription drug plan for the uninsured and underinsured (which he has dubbed "CosCare") and crack down on uninsured motorists.

Cosgrove isn't afraid to suggest unusual proposals including, as one independent agent puts it, "some real zany things." The 51-year-old Miami lawyer-turned-legislator is in his element before a crowd. When the lights briefly flicker off in the room, Cosgrove doesn't miss a beat: "I'm not a politician that does better in the dark," he tells the audience.

A University of Florida graduate, Cosgrove received his law degree from Cumberland Law School in 1975. He and his wife, Bernadine, have three children: Michael, Tiffany and Colleen.

He was first elected to the state House in 1980 and, other than a two-year break between 1984 and 1986, has served continuously since. He was put on the insurance committee in 1988 without asking to join and found a topic that would bring him both headlines and accomplishments.

Always a maverick, he was the only lawmaker in either chamber to vote against a school building proposal in 1997 that he deemed a "Band-Aid" to overcrowding.

Two years ago, he sued the state windstorm pool in a class-action case challenging a rule requiring some residents to buy flood insurance as a prerequisite for windstorm coverage. Cosgrove, must leave the state House this year because of term limits, launched his campaign for insurance commissioner in May 1999. He was enjoying the bulk of support from the insurance industry until Gallagher entered the race four months ago. Gallagher quickly shot past him in contributions.

Well-known in South Florida, Cosgrove has been criss-crossing Florida in hopes of offsetting the statewide name recognition enjoyed by his opponent. In the latest poll by Mason-Dixon, Cosgrove was trailing with 30 percent of the vote compared with Gallagher's 51 percent. Cosgrove's followers at the luncheon vow to stick with him till the last vote is counted.

"He's always been a friend of the agent. He understands how the business operates," said Gordon Spiering, a fundraiser sponsor and chief executive of HSC, a company that markets a savings card for prescription drugs.

A veteran of political races

Tom Gallagher, rarely at a loss for words, hedges his answer.

How can he support low rates for coastal Floridians in the state-run windstorm pool without forcing the rest of homeowners statewide to subsidize them through high assessments if a major storm strikes?

Gallagher vows to work with the Legislature and industry leaders on revamping a flawed system. But for now he wants to keep a specific game plan in his vest pocket.

"I'm pretty good at getting things done," he says, smiling during a recent stop in Tampa.

That self-confidence, along with a detail-oriented mind and a dose of charisma, has helped Gallagher come a long way in Florida politics.

The oldest of eight children in an Irish Catholic family, Gallagher grew up in Wilmington, Del.

He moved to Florida in 1961 to attend the University of Miami on a partial swimming scholarship. There, he was business manager for the college newspaper and earned a bachelor's degree in business administration. He served in the Army and sold school furniture and mortgage insurance before embracing politics as a member of the state House in 1974.

At 56, Gallagher is in his sixth run for statewide office. His resume includes two unsuccessful gubernatorial campaigns, two successful runs for insurance commissioner and a successful campaign for education commissioner. After his second bid for governor failed in 1994, he briefly ran a consulting firm in Clearwater.

Divorced in 1980, Gallagher carried a party-boy image with him for years. He remarried shortly before re-entering public service as education commissioner in 1998. He and his wife, Laura, have a son, Charlie.

Gallagher defines his political aspirations by the moment, refusing to speculate about plans two years out.

"I don't know that aspirations work, at least for Tom Gallagher," he said. "There is nothing I've really done in my political career that I've known about more than a month before filing."

Coming late to the insurance race certainly didn't hurt.

As of last week, Gallagher had raised $1.57-million compared with Cosgrove's $780,000.

Flashing a grin, Gallagher is unapologetic about his fundraising prowess. "Cosgrove's gotten plenty of money from the insurance industry before I got into the race. I'm sorry if it dried up because all of a sudden they perceived him as not winning," he said.

After spending more than a half-million dollars on TV commercials in the past three weeks alone, Gallagher still has almost $400,000 in his account as of last week. Cosgrove, by contrast, has spent just $25,000 the past three weeks with his campaign fund hovering just above $100,000. Gallagher points to his six years of experience as insurance commissioner as the best proof he can handle the job. Quizzed about specifics on how to improve the homeowners insurance market, he says he doesn't want to make promises he knows cannot be kept.

"I'm not giving you a plan because there is no plan," he said. "This is something that has to be negotiated with the legislative leadership and the industry in how to see to it that the goals I've set are met." One of his goals is to expedite rate decisions. Gallagher says he is more concerned with eliminating bureaucratic red tape than with making a mistake that can be fixed later.

Mary Wayne of DavisBaldwin Insurance was among 50 agents listening to Gallagher describe what he could and could not do during a recent lunch at the Radisson Riverwalk in downtown Tampa.

She liked what she heard, especially when he turned to education reforms.

"I don't know much about (the issues) but he kind of impresses me as being honest," she said.

Positions and proposals

Here are major stances and proposals from the two candidates for Florida insurance commissioner:

Tom Gallagher

Homeowners insurance: Let homeowners deal with a single agent for all their property and casualty and windstorm needs; work with the Legislature and industry to devise a plan.

Replace the computer models used for determining rates with the actuarial tables used before Hurricane Andrew.

Get rid of a three-member arbitration panel that insurance companies can appeal to if they disagree with a rate decision by the insurance commissioner.

Auto insurance: Examine the no-fault law with the Legislature.

Small business: Promote legislation to increase health insurance coverage and availability for small businesses.

John Cosgrove

Homeowners insurance: Eliminate administrative overhead and certain profits to "guarantee" a 20 percent rate reduction for all policyholders in the Florida Windstorm Underwriting Association (the state-run pool for windstorm insurance).

Eventually eliminate the windstorm pool altogether.

Make public the computer models used for determining rates.

Get rid of a three-member arbitration panel that insurance companies can appeal to if they disagree with a rate decision by the insurance commissioner.

Auto insurance: Increase fines for people who do not have insurance.

Seize vehicles of uninsured drivers after the second offense and make drivers forfeit the vehicles after the third offense.

Hire more fraud investigators.

Health insurance: Create a prescription drug plan under which the state will negotiate rebates and discounts of at least 10 percent with pharmaceuticalmakers and labelers. Targets 2.4-million Floridians who are uninsured or underinsured.

- Sources: Candidate statements, Times research.

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