Florida politics, property insurance headed for showdown

February 14, 2013 

For all of Gov. Rick Scott's bluster about shaping Florida into the most business-friendly state in the union, the governor will have a tougher time addressing a consumer pocketbook issue that threatens millions of Floridians: the soaring cost of property insurance.

The governor has been pushing the state-operated Citizens Property Insurance Corp. to shed policies to reduce financial risk. The public entity has responded by driving up premiums, denying discounts and eliminating coverage of structures such as carports and pool cages.

This week, Citizens unveiled another strategy -- dumping thousands of coastal hurricane policies into the hands of a private insurance company. Weston Insurance Co. will assume responsibility for Citizens' wind-only policies in coastal areas -- such as Manatee County.

While the vast majority of the 31,000 wind-only policy-holders are homeowners, thousands of condominium complexes and commercial properties will also be shifted out of Citizens.

Under the arrangement, Weston is obligated to service those policies under the limits set by state law on Citizens. That allows Weston to boost rates by 10 percent a year, an increase that these policy-holders can likely bank on.

In a worse development, a new measure being drafted in the Legislature would allow insurance companies to increase premiums quicker while forcing Citizens to also charge higher prices -- higher than private market rates. The measure deletes the word "affordable" from state insurance law and inserts the rationale to "reflect the risks covered."

The new legislation also allows insurers to charge additional fees to help pay for backup insurance -- including Citizens. Plus, several provisions erect barriers to joining and remaining with Citizens.

Under the bill, these rates hikes would hit homeowners next year -- a campaign year for Scott. This puts the governor in quite a quandary as a politician who has already foisted huge premium price increases and reduced coverage on property owners through his aggressive pressure on Citizens to force many of the company's 1.3 million policy-holders into the private market.

The ultimate price could be Scott's political career. Should his gubernatorial opponent be former Gov. Charlie Crist, Scott will be up against a candidate who froze Citizens' rates as governor and saved property owners millions of dollars by requiring "affordable" premiums. That consumer-friendly stand contrasts sharply with Scott's market-based position.

Plus, Citizens damaged the public trust with the company's excessive expenditures on lavish travel and dining, and the dismantling of its Office of Corporate Integrity. The scandalous spending alone engendered widespread furor from consumers burdened with rate increases and policy difficulties.

This year, politics will certainly come into play over property insurance. Legislative action is likely doomed with Republican lawmakers from the Tampa Bay and South Florida regions, representing voters with the highest insurance premium, expressing opposition.

With Florida escaping a direct hit from a hurricane for seven years, average rates doubling over the past six years ago, and Citizens sitting on a $6.2 billion surplus, voters cannot be expected to come to grips with the alleged "recipe for disaster" that the state insurer represents. Especially when the remainder of that statement refers to private industry profits.

The cost of doing business in Florida is dropping, but the cost of living is rising. That should be a consideration in the governor's jobs strategy.

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