Insurance Reform - What Can You Expect?

Florida Seal
TAMPA -

CARSON COOPER: A deal has been reached on property insurance and now it's off to Republican Governor Charlie Crist for his approval or his Veto. Here is Governor Crist talking about what rate payers can expect if he signs the bill in front of him:

CRIST: It's going to be different for every Floridian, but this I know for every Floridian, there rates are going to come down. And this is something we have to stay vigilant about.

COOPER: Meanwhile the insurance companies are unhappy with many of the proposals, while groups like the Florida trial lawyers and the Florida AFL-CIO are calling the plan a good first step. To help sort this legislation out, we turn to WUSF's John Sepulvado. John has been following the story from Tallahassee and here in Tampa. So John, let's start with the question of rates----how much will they be reduced?

SEPULVADO: Well as the governor says it will be different for every Floridian if he signs the bill. But the funny thing is the numbers are always different depending on who you ask. The insurance companies have consistently said the savings will be low while the risk to the industry will be high while lawmakers were throwing out numbers as high as forty percent as the bill was moving through the process. But right now, as the dust in Tallahassee clears, the most consistent number coming from lawmakers and lobbyists is somewhere in the mid-to high teens, or basically around fifteen cents per dollar less than current rates.

CARSON: So how is this happening? If Governor Crist signs this bill how will rates drop?

SEPULVADO: The idea here is spreading out the risk. If there's more competition, if there are more insurers, if there is more money in the catastrophic fund, there will be more hands to hold the buck when the buck stops. Lawmakers say by ending cherry picking, by requiring tougher building codes, by bulking up the cat fund and by diversifying citizens property insurance the risk will be diversified.

COOPER: As you reported earlier, John, the expansion of Citizens Property Insurance was especially contentious. The House appeared to want a gradual role back of Citizens, while the Senate wanted the state's insurer of last resort to go into auto insurance, as well as other markets. The House gave up their position. So what did the Senate get exactly?

SEPULVADO: The Senate and House, Carson, both wanted a rate reversal that happened on January 1. If anyone paid the higher rates already, they should expect a significant rebate. The proposals hatched in the Senate allowing citizens to cover businesses statewide, as well as write multi-peril policies in High Risk accounts were designed to, again spread risk so that when Citizens does have to raise revenues, the rate spikes will be smaller because there will be more policy holders.

COOPER: John, we know that policies this complex often take quite awhile to mature. What happens if there is a catastrophic storm before this plan fully develops?

SEPULVADO: I posed that question to many lawmakers, lobbyists, experts and while there was a large amount of speculation, the short answer seemed to be let's hope, wish and pray that if a big storm has to hit, that it does so after the kinks are worked out. Again, even some of the principal policy makers aren't sure what would happen.

COOPER: John, we've been talking about Citizens Property Insurance, rate reductions, anti cherry picking, mitigation, all of it--- for the past two weeks. Were there any other stories up there in Tallahassee that can offer a glimpse of how this statehouse will operate the next two years.

SEPULVADO: Well Carson, it's important to remember that this issue---reducing rates---seemed to bring everyone together. There were only two votes against the bill. Both of those house members are closely allied with the insurance industry. That being said, there was a side story with a local connection and that is the emergence of State Senator Rhonda Storms.

COOPER: Sen. Storms? As a former Hillsborough county commissioner she earned a reputation as a champion of conservative values

SEPULVADO: And others would say she was a lightning rod for division, love her or hate her, or just getting to know her, she pulled off a minor coup when she teamed up with another senator to squeeze in anti-cherry picking provisions despite the objections of some powerful senators. And when you ask Republican Senate President Ken Pruitt about her, he kind of leans back in his chair and grins widely, and says:

PRUITT: I have never been more impressed with a freshman Senator. She knows her issues you better know you're issues before you debate them because she will know them better she is an outstanding Senator.

SEPULVADO: And so it seems Senate President Pruitt really thinks Sen. Storms is going to be a key player this upcoming session. This time it was on a bi-partisan issue that seemed to unite lawmakers of every stripe. We'll get a chance to see what kind of coalitions she can build as the issues become more ideological and heated.

COOPER: WUSF's John Sepulvado recapping the special session on property insurance rates John Thank you.

SEPULVADO: Thank you Carson.

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