Business Group Takes on Gov. Crist On Property Insurance
Those skyrocketing property insurance premiums left in the wake of eight recent hurricanes didn't blow their way only in the wallets of homeowners - they're also draining resources from businesses.
That's the bottom line of a report from a business lobby group that was delivered yesterday to Gov. Charlie Crist and the leaders of the state House and Senate.
The report came from a group calling itself the Florida Hurricane Crisis Coalition. It's a creation of Associated Industries of Florida. It represents eleven-thousand businesses statewide and has been around since 1920.
Barney Bishop is the association's CEO.
BISHOP: What we're really looking at is house of financial cards, that we're looking at a situation where Florida may not have enough money to pay future debt from hurricanes. And if we don't, then we could have a catastrophic failure of Florida's government and of our economy.
The list of recommendations comes days before the start of a special legislative session. Lawmakers are going to consider ways to address the state's property insurance crisis.
Bishop says they are proposing 11 principles.
BISHOP: Most importantly is hardening people's homes. We are suggesting a dedicated funding source. If the legislature and governor approve, it would put $400 million annually on the table to help people harden their homes. That, by itself over time, will do more to cut down on the amount of losses and the potential cost to insurance companies and consumers than anything else we can do.
Their plan would double the amount lawmakers placed into the fund last year. It primarily targets vulnerable buildings, such as mobile homes.
But at least one consumer advocacy group says that may need to be done, but there's no guarantee lawmakers will come up with enough money. Bill Newton is executive director of Florida Consumer Action Network.
NEWTON: Doing that's going to be expensive and we haven't seen the money thus far that would really be needed to carry this out. We'd like to see the Legislature say, OK, we're going to retrofit the housing stock of Florida over the next five years, we're going to do this many homes per year at a time we get to the end of five years, it's going to be done. And how much money is it going to cost to do that?
Another idea that has been floated before the special session is to tell insurance companies that if they want to cover the state's lucrative automobile market, they'll also have to insure homes.
Bishop says that would be forcing insurance companies to be in a market they don't have confidence in. He says such a law could backfire.
BISHOP: Let's face it, if insurance companies can't make a profit, then they're not going to do business in Florida. Insurance companies have got to make a profit, because if they don't, they're not going to do business here.
But Newton believes the lure of Florida's growing market is enough to keep insurance companies in the state.
NEWTON: The insurance industry often does this, they try to frighten people into thinking they're going to leave the fourth-largest market in the United States, and people don't remember that they made $60 billion in profit - maybe even more - in 2006. They're not going to walk away from that kind of money.
And the business group wants insurance companies to be able to offer much larger deductibles on homes to lower premiums. FCAN's Newton says that means when a big storm comes, someone's going to have to pay, and that would be the homeowner.
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