Rep. Ross Pushes for ‘Cultural Changes’

May 12, 2008

The Lakeland Republican sees the state as ‘dangerously exposed’ if storms batter insurance industry.

By Bill Rufty
The Ledger--May 12, 2008

LAKELAND | Rep. Dennis Ross, punished last year for opposing the governor’s attempt to fix problems with high property insurance rates in Florida, was restored to a position of influence this year and asked to be the House’s chief negotiator with the Senate.

But don’t look for big drops in insurance rates or in the danger that you could be assessed a hefty fee if the state-sponsored insurer of last resort can’t pay off in the case of a big hurricane.

“I was able to put in a few cultural changes, which might in the future prove to be beneficial, but right now, the state of Florida is dangerously exposed,” Ross said.

The Lakeland Republican ran into trouble in January 2007 when he opposed increasing the size of the state’s Catastrophic Fund, or CAT fund as it known, which provides reinsurance if there is major hurricane damage. Reinsurance is what insurance companies buy to protect themselves in case there is a disaster that could be too large for them to handle.

Ross also opposed increasing the number of premiums Citizens Property and Casualty could write directly to cover property owners. Citizens is a state-supported agency that provides insurance for people who can’t get it from private companies.

It is a basic philosophical difference.

Ross has argued for a free market with private insurance companies, adding that competition will keep the prices lower, or at least at market value.

Gov. Charlie Crist and his supporters have pushed for more people to be included in the government-sponsored program and for price controls on premiums; not the normal free-market GOP philosophy of less government involvement.

This year, as a few more members of the House began to agree with Ross, Speaker of the House Marco Rubio asked him to negotiate with Sen. Jeff Atwater, R-North Palm Beach, who is the Senate president-designate and whose district includes many coastal residents who have insurance from Citizens.

Ross said he knew he could not stop the Legislature from freezing premium rates in Citizens for a second year, but he worked on the “cultural changes” that would require the state Office of Insurance Regulation to conduct its rate review in public and cut in half the time for granting a rate change. Another change also would take $250 million from the Citizens Property and Casualty to be used as incentives for new insurance companies to form here or to move the state.

Ross said he wanted the insurance office to do its work in public, so companies and consumers can understand how rates are made.

Rate making now is politically driven, he said, and it is driving insurance companies away.

“In an election year, lawmakers freeze Citizens’ rates, and the governor wants private rates low, so he tells the office of insurance not to approve higher rates,” Ross said. “But that does not solve the problem that the rates are far below market and places everyone at risk for massive assessments if Citizens can’t pay for damages from a catastrophic hurricane.”

Instead, the state should be encouraging more companies to come in to the state, he said.

“I would love to see 30 new insurance companies come to Florida,” he said, “but they can’t compete against Citizens, which has 40 percent of the market, mostly on the coast, and premiums that are 25 percent below market value.”

Ross said his changes may not excite the average policy holder, but they could move the insurance discussion in a new direction in the state.

“If we have more insurance companies coming into the state, there is more competition, and that makes for lower rates,” he said. “We have opened rate making to the sunshine and shortened the time a company can find out if it gets a rate increase.”

The other change is the $250 million, which will be used as incentives to insurance companies that will come to the state and take 15 percent of the clients now in the Citizens Property and Casualty program.

“Unfortunately, we did not make a significant change in insurance issues this year, but I believe we are starting the turn,” Ross said. “My colleagues are scared of insurance. Our (insurance) system is a tax. It is a tax that Citizens can assess on auto, home, even renters insurance anytime it finds itself in a hole.”

Ross said he is hoping for a change of mind among the state’s lawmakers, who, he said, tend to blame insurance companies for high rates, instead of the catastrophes.

“I think the only way we will have real insurance reform is if we have a catastrophic event in Florida,” he said. “They (legislators and administration officials) have guaranteed re-insurance and guaranteed that Citizens can assess everyone if it starts to go into deficit, and the people of Florida just will not stand for it when that happens.”