Changing policies

Consumers are expected to win this week's insurance tug-of-war — for now

You figure that if you "invested" more than $31 million (and that doesn't count lobbying fees, steak dinners, etc.) in the Florida political system in the past decade, you would be treated better than the insurance industry is expected to be this week in Tallahassee.

But the guys in thousand-dollar suits and shiny shoes hanging out in the Capitol rotunda probably aren't going to feel well-served by all those campaign contributions ($11 million to the Republican Party; nearly $3 million to the Democratic Party) once the Legislature gets done trying to fix the state's broken home-insurance system.

The industry is not going to go broke as the Legislature tries to reverse the skyrocketing cost of homeowners' premiums. But consumer advocates hold out great hope for this week's session.

"It does really look like it is a new day in Tallahassee with Charlie Crist," said Bill Newton, executive director of the Tampa-based Florida Consumer Action Network. "That's a powerful friend for consumers over there in the governor's mansion."

Crist has met with the coalition of consumer and activist groups that Newton spent years putting together, and the governor (unlike his predecessor) is advocating their desires.

And the scheduled meeting between the industry and the consumer groups? It was canceled by industry officials, Newton said. They were too busy.

"They're not in favor in Tallahassee" this year, he said. "It is a question of how much are they going to lose."

As the state became increasingly involved in providing insurance, through its insurer-of-last-resort, Citizens Property, legislators heard from their constituents that they weren't going to take high rates any more.

And so the legislators are now considering themselves less as regulators of insurance companies and more as a competing company, Newton said.

This column goes to press before the session's start on Tuesday, but from most indications, you can expect legislators to:

• Repeal the required rate increases for Citizens customers that were passed in 2006, and freeze rates at the 2006 level for the next year.

• Give Citizens more flexibility in selling insurance and in setting lower rates to compete with privately owned companies. Currently, Citizens has to charge rates higher than the top 20 private insurers. In addition, Citizens could sell other forms of insurance that it is currently prohibited from offering, lucrative policies that would help spread out its financial risk and lower premiums for the most hurricane-prone properties. The insurance industry doesn't like this.

• Cap the total risk assumed by private companies and put more of the onus for catastrophic losses onto taxpayers. The Legislature is considering increasing the public's share of the risk by using increased sales taxes to cover losses. The industry likes this. For taxpayers, they save now but will have to pay later, after the storm.

Less sure of passage is a provision to create an Office of Insurance Consumer Advocate to act as an industry watchdog, something that FCAN wants to see happen. Other consumer-friendly provisions — such as prohibiting insurers from dropping customers who have paid premiums for three years and have filed no claims — may be lost between the House and the Senate versions of reform.

And it remains to be seen if the Legislature will truly step on the industry — for instance, by taking into account the profits of a Florida-only insurer's parent company when setting Florida rates. Insurers would rather have their poorer Florida subsidiaries' profits considered, not the fat net revenues that its parent firms compile nationally.

The fact is, Florida has always shifted the financial burden of coastal insurance to the state's inland homeowners. It keeps the cost of living in the most populated areas cheap and attractive. That isn't likely to change any time soon.

Finally, you'll never guess who the Tampa Bay region's most influential and pro-consumer legislator is on this issue.

(Wait for it.)

Ronda Storms.

"She is tearing up that [Senate Banking and] Insurance Committee," Newton said. "I have to give her some credit. She's been fighting the insurance companies. She's articulate, and she's very effective."

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