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Article Courtesy of The Sun Sentinel
By
Dan Gelber
Representative
Dan Gelber is Democratic leader of the Florida House
Published January 8, 2007
Later
this month, the Legislature will meet for a long-overdue special session
intended to address Florida's hurricane insurance crisis. Part of the job
will be to undo portions of a horrible Republican-backed bill passed last
spring that allows insurers to charge obscene rate increases. The bad news
is that the same group that wrote the last bill will be writing the next
one. If they decide they want to actually help this time, here are some
dos and don'ts:
Do lower rates. We will have failed Floridians if we don't. The goal of
the Legislature should be to bring insurance rates down immediately for
homeowners and businesses, not just slow rate increases. At a minimum we
need to cut rates by at least one third from their current levels.
Don't wait for the market to fix itself. This is how the insurance
companies are used to being treated by their Republican friends, who
believe that allowing companies to collect uncontrolled profits will
eventually promote competition in the marketplace. It hasn't. Democrats
believe that we cannot cross our fingers and hope that Florida's
dysfunctional insurance market corrects itself within a decade.
Don't wait for a "federal" solution. We cannot wait and hope for
the federal government to establish some kind of national fund for natural
disaster damage relief. Rather, the state has to use all means necessary
to lower rates now.
Don't simply ask homeowners to opt to pay higher deductibles. Giving
homeowners the choice to raise deductibles is not a solution, just a
choice of last resort. It may work for some, but it is really an unfair
and risky decision that Floridians should not have to make. Imagine what
will happen when we do get a hurricane and thousands of our neighbors
can't afford to rebuild.
Do marshal the state's current involvement in the insurance market into a
single effort. The state's Citizens Property Insurance Corp. is the
largest windstorm insurer in the state and, by law, its 1.3. million
high-risk policyholders must be charged the highest premiums. Similarly,
the state catastrophe fund is a state insurance fund that is available to
help people rebuild after a hurricane causes damage exceeding $5 billion.
Both of these funds, and others, rely on the state assuming hurricane
risks, but not in a way that makes the best sense. We should spread the
risk of Citizens rather than concentrate it only among high-risk
policyholders. Similarly, the CAT fund may not be delivering its relief at
the right place where it will optimally lower rates.
Do put the governor in charge. The Legislature must give the governor all
the tools necessary to work with insurance companies in a rational and
meaningful way with the goal of lowering insurance premiums. Too often,
legislative responses to this crisis have been inadequate because my
colleagues have only followed a path drawn by the insurance industry. And
when we have passed bills, as we did earlier this year, we can do nothing
other than cross our fingers and pray. The governor needs the authority
and flexibility to act in the 10 months when the Legislature is not in
session.
Finally, do make sure everyone -- including the Legislature -- remains
accountable. After the Legislature meets in January, it should meet
monthly through a joint committee of the House and Senate.
Further, the powers that we give the governor should include some triggers
that require legislative approval or notification to assure we don't
abdicate our oversight responsibility. For instance, the Legislature
should still have to approve decisions that change the levels of debt and
risk the state assumes.
Amazingly, windstorm insurance rates are doing more damage to
homeownership than hurricanes themselves. This is the Big One and it
threatens Floridians without ripping off a single shingle. Until we treat
this as a crisis of that order, we will continue down the same road that
got us here.
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