proposed property-insurance reforms sell Floridians short!
Article Courtesy of The Orlando Sentinel
Published November 19, 2006
homeowners deserve substantial relief from soaring property-insurance
rates. But they should be wary of getting it from lawmakers in a special
legislative session, which Gov. Jeb Bush is considering convening.
The session would likely seek to craft a reform package based in part on
recommendations unveiled last week by a Bush-appointed task force. But the
recommendations ask homeowners to assume more risk in exchange for lower
premiums. They offer insurers financial incentives to entice them to
operate in Florida without quantifying exactly how those incentives would
benefit residents. And they fail to include bolder measures carrying the
potential to land consumers prodigious savings.
Gov.-elect Charlie Crist's plan to shelve a law allowing national insurers
to operate subsidiaries in Florida that send profits out of state but keep
losses in, for example, isn't among the recommendations. That law makes it
possible for insurers here to claim they're drowning under the weight of
claims tied to eight hurricanes that hit Florida in 2004 and 2005. But it
also allows their out-of-state parents to count record profits.
To be certain, the task force offers some sensible recommendations. For
instance, it suggests that homeowners get told precisely what savings they
can expect on their premiums if they choose to pay to strengthen their
homes. But it also advocates largely discredited courses of action, such
as forming a national catastrophic fund that states experiencing few
natural disasters want no part of.
Mr. Bush wisely says he won't call the special session unless there first
is a consensus among officials on what recommendations make the most sense
for Florida. But a consensus on some measures still could do more harm
Passing a recommendation allowing homeowners to pay far greater
deductibles in exchange for lower premiums, for instance, would likely
entice many vulnerable, long-suffering homeowners struggling under
oppressive rates. Should their homes then suffer major damage in a storm,
they could find it impossible to pay the bill to fix them.
If the special session convenes, it would do better to address a few
especially time-sensitive items, such as state-subsidized Citizens' latest
outrageous rate-increase request. It shouldn't seek to remedy virtually
overnight problems most sitting legislators let balloon over several
years. Earlier hastily fashioned remedies produced programs designed to
help residents strengthen their homes and to get more companies to write
Florida polices. They were followed, though, by insurers dropping coverage
for thousands and increasing premiums for thousands more.
Floridians voted for Mr. Crist and lawmakers to rein in the problem.
Together, they should be given that chance.