EDITORIAL: Our position: Crist needs to get involved in legislative effort on property insurance

Mar 28, 2008

Are You Over Paying for Homeowners Insurance?

Orlando Sentinel--Mar. 28, 2008
Almost midway through the session in Tallahassee, legislative leaders are making more sense than not as they try to get the state and its homeowners to weather the property-insurance crisis.

That could change, however, if the Senate takes a reckless turn in its worth drive to toughen regulations. It resisted taking one on Tuesday, when its insurance committee kept from its reform package a demagogic call denying the industry allowable profits.

It could change if the House, seeking to lessen the risk the state took on last year by expanding Citizens and the catastrophe fund, irresponsibly subsidizes the well-heeled industry in an attempt to get it to take on more customers. Fortunately the chairman of the House Insurance Committee, which has yet to pass its own reform package, says he opposes an effort to give the industry bonuses.

And it could change if Gov. Charlie Crist, who last session urged the Legislature to rein in the insurance industry but this session has done little, doesn’t show the leadership needed to keep lawmakers on course.

So far, lawmakers are doing a fair job. The package the Senate committee passed requires property insurers to lower premiums overall if they dump a portion of their policyholders. It makes permanent the law last year that keeps the industry from imposing higher rates before regulators approve them. It jettisons some discredited formulas insurers used to set artificially high premiums. And it boosts fivefold the fines for violating state insurance rules. Each is needed, as regulations passed last year only helped drop rates an average 15 percent, not the promised 24 percent.

The Senate and House also appear to have agreed to shed some of the risk the state took on last year when it offered more, cheap backup insurance to companies to help them pay claims after catastrophic storms. Savings insurers got by buying that “reinsurance” were supposed to get passed on to policyholders in radically discounted premiums, since insurers said the high cost of private reinsurance is what forced them to hike premiums. But those discounts haven’t measured up.

Though policyholders statewide could endure hefty surcharges to help the state pay claims after a storm like Andrew, lawmakers should resist the temptation to trim the state’s risk by more than the seemingly agreed-to $3 billion. And they should shed the $3 billion only if insurers can get reinsurance privately for no more than 50 percent what the state would charge. Remember, whatever it costs insurers, they’ll pass that cost on to their policyholders.

Simply getting lawmakers to agree to toughen last year’s regulations, though, could be difficult. House Insurance Committee Chairman Don Brown calls them “reckless.” Lightening slightly the state’s risk load also could unravel. Mr. Crist needs to enter the fray.