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Insurance rage yields to decorum

By Harold Bubil, Real Estate Editor, Herald-Tribune

June 4, 2011

My new journalistic hero, Pulitzer Prize winner Paige St. John, was cool and collected and oh-so-knowledgable on the stage at New College's Sainer Pavilion Wednesday evening for the Herald-Tribune's "Hot Topics" forum on Florida homeowner's insurance.

And she wasn't even feeling well from a nasty respiratory condition.

Me, I was just struggling to keep up. But as a homeowner paying $3,800 a year for property insurance, I also just wanted to scream. As my bosses were in the audience, I thought it best to keep my mouth shut and just take notes as two state legislators and the decreasingly powerful state insurance consumer advocate discussed the merits, if any, of Florida's insurance system, and Senate Bill 408, which could be the best thing that has ever happened to insurance companies in the state, or the worst thing that has ever happened to their customers, or both.

"Rates will go up," said one panelist, state Sen. Mike Fasano of New Port Richey. He was joined on the stage by St. John, state Rep. Jim Boyd of Bradenton and Terry Butler, Florida's interim insurance consumer advocate. That must be one tough job in this state.

You should know right off hand that Rep. Boyd is an insurance agent. As such, he defended his industry by saying the senate bill could encourage more insurance companies to enter the Florida market. (Competition is a good thing, right?) He also said Citizens Property Insurance, the state-run carrier for homeowners the private companies are reluctant to insure, has an unfair advantage in the marketplace because it does not pay taxes and does not have to buy reinsurance to pay claims in the case of a catastrophe.

Not one person hooted or booed from the audience, although Butler said he has seen such behavior at other public forums he has attended. That's Sarasota for you.

Butler even praised Boyd, noting he helped "delete some of the most anti-consumer provisions" from the bill, and "deserves praise for that."

For his part, Fasano, who has said the bill is the most anti-consumer bill he had ever seen, added, in a most gentlemanly fashion, that the bill "repeals the requirement that the consumer advocate prepare a report card on insurance companies. Why would we want to repeal that? The bill helps the insurance industry and takes away important consumer protections. Make no mistake. Rates will rise."

During the debate on the bill, said Fasano, "No consumer was brought to the table. The insurors were there. The consumer advocate was not. This bill was passed on the last day on the session by both houses and sent to the governor for his signature within five days. I have never seen that happen before."

Countered Boyd, "Insurance is the spread of risk. It is good to have more companies here that do business elsewhere. That is where we need to get. State Farm can't compete against Citizens. Actuarially sound rates have to be forced upon Citizens. It has $450 billion in exposure and the rates aren't growing at the same level."

St. John noted that her job is only to ask questions. She closed with a doozy.

"Why do we have to pay more? We are already paying much more than we are getting back in claims," she said. "Reinsurance used to be 10 percent of the premium, now it is 70 to 80 percent. It is like living off a credit card. You never get ahead."

"Paige makes a very good point," said Fasano, who advocates a statewide windstorm insurance pool for all homeowners, similar to the National Flood Insurance Program, that would leave coverage of fire, theft and other losses to the private companies. "Call the state and ask how much of a rate hike your insurer has been granted. All of them have gone up. And they have raised the replacement value of your home even as the market value has gone down."