New Florida Legislative Session Faces Familiar Problems
Randi Schuknecht worried that her longtime, established insurance company was about to leave Florida — and leave her without a homeowner’s policy. So she found a new insurer — one she wouldn’t have to worry about if a big storm struck the state and damaged or destroyed her home.
But that switch from State Farm Florida to Florida Farm Bureau is costing the Tallahassee elementary school teacher about $400 more annually. It was the best deal she could find with a company she was confident was solvent.
“I was afraid that if you waited too long and State Farm did pull out, you would sort of be at the mercy of the insurance companies with so many people needing insurance at the same time,” she said. “All the other quotes I was getting from the Web site were double and some were triple. I didn’t want to get caught in that.”
When the Legislature convened on March 2, it began anew to try to solve the state’s insurance puzzle – how to make policies more affordable while making sure that the companies are able to cover claims if a major hurricane hits the state? Because if the companies can’t pay, the state could be on the hook for billions. It also needs to get more customers off the state-backed, underfunded insurer of last-resort, Citizens Property Insurance Corp.
“It’s like a kaleidoscope,” said Rep. Bill Proctor, a St. Augustine Republican who filed legislation he believes will help keep companies and the state solvent. “You think you see (the solution) one minute and the next minute it’s different.”
“We have a long way to go,” concedes Senate President Jeff Atwater, R-North Palm Beach. “How we get there, I don’t know.”
This should be a profitable period for the insurance companies — no major storms have hit the state since 2004 and 2005, when eight struck. But many of the companies claim to be losing money.
“The thing that’s worrisome is you see that 102 of them are reporting losses when you’ve had no storms,” Proctor said.
A handful of proposals have already been introduced, including one similar to a measure vetoed last spring by Gov. Charlie Crist that would largely leave premium rates up to the insurers. Currently, the rates have to be approved by the state.
“It’s time, we’re going to have to come to grips with the reality we’re going to pay rates equal to the risk,” Proctor said.
Atwater, however, wants to reduce the risk for worried homeowners like Schuknecht.
And while luck has been on the side of property owners and insurers in recent hurricane seasons, Florida’s $2.1 trillion exposure dramatically exceeds any available insurance coverage.
“Florida taxpayers remain on the hook for potentially billions of dollars of claims following a major catastrophe,” said Sam Miller, executive vice president of the Florida Insurance Council. He noted that many of the newer, small companies that make up half the market would likely go bankrupt if a cataclysmic event happened. The state would have to step in.
“It is not all OK,” said House Speaker Larry Cretul, whose policy was canceled by his carrier. Cretul, however, was able to find a replacement for a slightly lower rate.
“Competition is what drives prices down,” said Sen. Garrett Richter, a Naples Republican who chairs the Senate Banking and Insurance Committee.