Complicated Plan Could Lead to Extended Session
(05/05/2006, St. Petersburg Times )
Forget a bailout for Citizens Property Insurance Corp., Florida's beleaguered insurer of last resort. Instead, state lawmakers may vote as early as today to send each homesteaded Florida property owner a $140 check in the mail.
The $715-million rebate plan, pushed by Gov. Jeb Bush and proposed publicly for the first time Thursday, is part of a tentative deal being finalized that would rewrite many property insurance laws in light of such active hurricane seasons.
It comes in lieu of an original plan to simply spend the entire $715-million offsetting part of Citizens' $1.7-billion deficit from the 2005 hurricanes. Under current state law, all property insurance policyholders in Florida will have to cover that deficit through assessments added to their 2007 insurance premiums.
"If you just pay off the insurance shortfall, my opinion is the people of Florida won't see it," Sen. J.D. Alexander, R-Lake Wales, said during Senate debate.
But sending the money back to homeowners, purportedly to help cover the cost of their insurance premiums, will cost $4.7-million.
The change in plan - not unlike a failed $100 rebate idea that just fizzled in the U.S. Senate amid public skepticism - was one of several elements that increased the odds Thursday that the Legislature may not reach an insurance compromise by tonight, when the annual 60-day session is scheduled to close.
Both Senate President Tom Lee, R-Valrico, and House Speaker Allan Bense, R-Panama City, raised the prospect late Thursday of meeting for an additional day.
And as the compromise plan was partially unveiled on the Senate floor Thursday night, it looked as if the additional time would be needed to get the Legislature's 160 members comfortable with the 124-page bill that could have up to 29 amendments in the Senate alone.
"If we can't do it right, we'll come back for a special session," Bense said.
"I am trying to stay optimistic," Lee said. "But if we're here Saturday, we're here Saturday."
Indeed, senators of both parties expressed concern that there was too little time to understand such a complex piece of legislation that had been negotiated by only a handful of lawmakers, their staff and a posse of insurance lobbyists.
"The fact is it's coming very, very late, and we're not going to really examine this until tonight," said Sen. Steve Geller, D-Hallandale Beach. "I just don't think it's reasonable."
Adding to the unease was the sheer complexity of the task. Lawmakers are trying to make Florida's homeowners market a more attractive risk to insurance companies after eight hurricanes in two years. Among the items in the compromise:
New rating standards would be used that would sharply increase premiums in the windstorm-only pool for Citizens property insurance, the state-backed insurer that provides coverage to owners who can't find it on the open market. Non-homesteaded properties, those where the owners aren't permanent residents and don't claim a homestead exemption on their property taxes, and those worth more than $1-million may also face a 25 percent premium surcharge.
Starting in 2008, properties worth $1-million or more would be excluded from Citizens' windstorm pool.
In the future, Citizens' deficits would be retired under a whole new system. Citizens policyholders whose homes don't have a homestead exemption would bear the initial brunt of any assessments to recover from a deficit. After that, all Citizens policyholders would be assessed. Only if those assessments don't cover the deficit would all the state's policyholders be forced to pay.
Insurance companies could raise rates up to 5 percent annually without any regulatory approval.
Small insurance companies would have easier access to the Florida Hurricane Catastrophe Fund, which provides low-cost reinsurers to backstop insurers.
A pair of low-cost loan programs would be created with $500-million. Half the money would help homeowners harden their properties against hurricane damage; the other half would be available to private insurers as a matching program to encourage them to invest more of their own money in Florida to write more policies.
"What do all these things cost, what is the impact on individual premiums?" Sen. Ron Klein, D-Delray Beach, asked roughly half an hour into Senate debate. "I certainly hope we'll develop that information before a vote takes place."
Even insurance lobbyists, some of whom spent much of the day working with legislative staff on language, scrambled to understand the complete picture.
"I think it does give a good signal to the capital markets about investing in Florida," said Mark Delegal, a lobbyist for State Farm, the state's largest property insurer. "But we're still going through it."
By far, however, the biggest change Thursday was lawmakers' switch from paying down Citizens current deficit to sending checks to every home.
Just last month, legislative leaders along with Bush signaled they had finally embraced the deficit-reduction plan, first pushed by Chief Financial Officer Tom Gallagher, a Republican candidate for governor.
Gallagher's proposal was aimed at sparing all Florida property insurance policyholders from at least some of an anticipated 11 percent assessment on their 2007 insurance premium to retire the Citizens debt.
But as negotiations progressed Thursday, Bush persuaded legislative negotiators to move to the $140 check plan, which means homeowners - who may or may not have insurance - will get cash from the GOP-led state government in the midst of an election cycle.
It won't be until months later that they get their 2007 insurance premium including the hefty Citizens assessment.
Lee said part of the appeal is that low-income homeowners will get proportionately more help with their insurance premium than will owners of more expensive homes. But he insisted he wasn't wedded to the plan.
"On the issue of how this money gets back to the consumer that paid this deficit, I'm all ears," Lee said. "I don't think that's nearly as important as that we get it back there and we get it back there as in an efficient way as we can."
Gallagher, whose department will be charged with cutting the checks, said he'll support whichever delivery system the Legislature decides.
"As long as the people get some relief, that's fine," he said.
Staff writer Jennifer Liberto, Steve Bousquet and Tom Zucco contributed to this report. Joni James can be reached at email@example.com or 850 224-7263.
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