Got Insurance ?

May 2, 2006

The state's lawmakers are struggling to come up with a compromise in insurance legislation before the Legislature's session ends later this week.

BY BEATRICE E. GARCIA AND MARY ELLEN KLAS

bgarcia@miamiherald.com

TALLAHASSEE - One version of a massive insurance reform bill was approved and new proposals surfaced as the last week of the legislative session got underway Monday.

Yet there's still no consensus on the best remedy for Florida's insurance crisis.

Senate leaders and insurance industry representatives worked on a plan over the weekend that would tap state coffers for about $500 million to create a loan program to help some insurers get on a more equal footing.

The Senate proposal, which has gained some support from key leaders in the House of Representatives, would allow insurers to borrow up to $25 million, as long as it is matched with an equal amount of existing surplus or new capital.

State Rep. Dennis Ross, R-Lakeland, said it was ''an innovative program'' as long as the priorities are appropriating state funds to a mitigation program to make homes more hurricane-resistant and covering a portion of the $1.7 billion deficit by the state's insurer of last resort, Citizens Property Insurance.

But Ross, who chairs the House Insurance Committee and who shepherded the insurance bill this session, contends that lawmakers need to be sure any loans coming from state dollars go to ``good, strong companies, not ailing companies on respirators.''

''The arguments are that you put a dollar up and we'll put a dollar up. It certainly is appealing on the surface,'' said House Speaker Allen Bense, R-Panama City, after the House had passed its own package of insurance reform measures.

But, Bense noted, the surplus loan program was a new idea that had come in late in the session and that may discourage him from giving it much attention. ``Our folks are going to scrub that issue more.''

Sen. Rudy Garcia, the Hialeah Republican who heads the Senate Banking and Insurance Committee, said the premise behind the surplus loan program was to strengthen companies' ability to continue writing policies in Florida ``so we don't lose them and their policies don't end up with Citizens.''

That's what's happening with the failure of the Tampa-based Poe Financial Group, whose three insurers were handed heavy losses after the eight hurricanes that hit the state in 2004 and 2005.

One firm, Southern Family, is insolvent and in the hands of regulators. It's expected regulators will take over Atlantic Preferred and Florida Preferred, the two other Poe firms, in coming days.

Industry sources said the idea of a loan program came from a bailout request by William Poe Sr., founder of Poe Financial, to state regulators. Lawmakers balked at the idea of using state funds to help just one insurer, but they began considering a plan to use some of the extra sales tax revenue to help various companies.

Among the key provisions of the House bill are the creation of a $500 million mitigation fund to provide low-cost loans for Florida residents to retrofit their homes and make them more storm-resistant and $920 million to cover nearly half of the 2005 deficit run up by Citizens.

The House bill also prevents Citizens from insuring homes valued at more than $1 million and tags a 25-percent surcharge on vacation and second homes.

Yet, neither the House bill that passed Monday, nor its Senate companion as currently structured, provides immediate relief from rising insurance rates for Florida homeowners.

Rep. Dan Gelber, D-Miami Beach, told his fellow representatives that his own insurance bill from Citizens is going up $6,930 this year to more than $15,000.

Though the House bill did pass, there remains some major differences with the Senate insurance measure.

The Senate proposal would phase out coverage for high-value homes in five years. It does provide a surcharge for non-homesteaded properties. The bill also provides $750 million to cover a portion of the Citizens' deficit and $50 million for a mitigation program.

Gov. Jeb Bush has warmed to the idea of using the extra state revenue to provide a small break for homeowners who are hit with surcharges on top of higher insurance premiums. But he's pushing for reform as well.

''It's a huge issue for the state,'' Bush said. ``I've said all along, unless there's reforms attached to the money, the money in and of itself is not satisfactory.''

House and Senate leaders are ''working on it. I hope it gets done prior to the end of the session,'' Bush added.

Bush wouldn't speculate on the chances of a special session but acknowledged that time is running out before hurricane season.

''We have a window of opportunity to act, and it's within the next couple of weeks.'' Bush said.