Gallagher considers quitting race for governor

Tom Gallagher is weighing whether to drop out of the governor's race to help his supporters rally around his rival in the GOP primary. BY MARY ELLEN KLAS meklas@MiamiHerald.com

TALLAHASSEE - Republican gubernatorial candidate Tom Gallagher is considering dropping out of the race at the urging of top advisors who want time to make peace with his front-running GOP rival, his close associates have told The Miami Herald.

Gallagher, whose fundraising and poll numbers have remained stagnant, is taking the advice seriously but has not made up his mind, his advisors said. What is clear is that Gallagher did not expect such a ferocious challenge from his affable opponent, Attorney General Charlie Crist, who has surged ahead in the polls by studiously avoiding conflict.

Gallagher has complained to friends that when Crist is forced to take a position, he often cribs Gallagher's policy proposals: ''He uses my words and ideas and says it better than I do,'' a frustrated Gallagher told one friend.

Gallagher's campaign said Tuesday that the candidate is considering all his options:

''Tom is evaluating -- with his family and his friends -- what is best for him and what is best for the Republican Party,'' said Gallagher spokesman Alberto Martinez.

This is not what Florida's top Republicans expected when they came through with nearly $9 million in contributions for the chief financial officer and lined up endorsements from the party's religious conservative wing.

Now, with Gallagher as much as 20 percentage points behind in recent polls and down by more than $2 million, many of those same people are getting cold feet. Some want Gallagher to bow out of the race to give high-profile supporters time to position themselves within the Crist campaign and allow Republicans to save their resources for the general election.

''He is under a lot of pressure from a lot of divergent groups,'' said Tom Slade, former chairman of the state Republican Party who said he was among those who have talked to Gallagher about getting out of the race.

Among those who are pressuring Gallagher, Slade said: ``Most of his heavy contributors who would feel very good about the opportunity to make good on the other side.''

Over the weekend, Gallagher met with some of his closest advisors in a series of one-on-one conversations in which they discussed the fate of his candidacy.

In addition to Slade, Gallagher has spoken with former Republican Party chairman Al Cárdenas and political consultant David Johnson, neither of whom would discuss their conversations with The Miami Herald.

Cárdenas did say Gallagher has not made up his mind yet on whether to leave the race and will not decide until new polls assess how well his latest round of ads are doing at moving voters.

''Today is not a day when he's seriously contemplating leaving the race,'' Cárdenas said Tuesday. ``It will probably be next week before it's fair for the Gallagher campaign to make an evaluation of where they stand in the race.''

The choice before Gallagher is whether to stay in the race and lose nobly, requiring both him and Crist to follow through with plans to spend another $4 million on TV ads before the Sept. 5 primary, or drop out now.

If Gallagher leaves the race, his name would still appear on the ballot, but his supporters could join the Crist bandwagon and jockey to become among Tallahassee's elite if Crist wins the election in November.

Gallagher himself ruled out the third option -- pulling down Crist's poll numbers by launching negative television ads -- months ago. At the time, Gallagher announced that neither he nor the third-party political groups that back him would resort to nasty television ads.

Gallagher has not wavered from that decision, and Crist's political advisors have warned they will return fire fiercely if Gallagher should.

Gallagher continued moving ahead with his campaign strategy Tuesday, visiting newspaper editorial boards while his campaign launched a second ad on Spanish-language television in Miami, featuring popular U.S. Rep. Ileana Ros-Lehtinen of Miami.

Meanwhile, Gallagher is being urged to stay in the race by members of his campaign staff and his wife Laura, Slade said.

'I talked to his campaign a couple of days ago and they said: `We've got the tools to stay in it,' '' Slade said. 'He would not surprise me at all if he were to say: `This is a Republican primary, I've got a legitimate right to be in it and Charlie could stub his toe.' ''

''He's got a pretty good deficit in both money and voters and that is not the recipe that winning political candidates seek,'' Slade said.

``He's also running against what some have called the best retail politician they've ever seen.''

As the week goes on, the window is closing for Gallagher to drop out and still protect his supporters if he were to lose, sources said.

Crist campaign advisor Mac Stipanovich said that while he would prefer to have Gallagher drop out early to allow the Crist campaign to ''meld the campaign staff, have sit-downs and retool county organizations,'' the downside is the loss of the after-primary momentum of a competitive victory.

''We lose the slingshot effect from the election night victory -- and all that goes with it -- particularly with a candidate that was once perceived to be very formidable,'' Stipanovich said.

Much of Gallagher's decision will depend on how far he wants to go to help his friends make a soft landing if his campaign fails.

''It's a decision Tom Gallagher has got to make and nobody can push him,'' Slade said. ``He's not pushable.''

Democratic Senator Bill Nelson took the State of Florida out of the national insurance pool when he was the State Insurance Commissioner. That's when Florida's insurance troubles began.

Thanks go out to BILL NELSON.

WE NEED TO EXPOSE THE MULTI-FACED ex. "ASS-NAUT" CADET ON THIS SERIOUS "CRIME" HE COMMITTED AS INSURANCE COMMISSIONER, AND THAT HE ILLEGALLY RECEIVED $75,000 FROM "RISCORP"!!!

TALLAHASSEE, Fla. - A lot of Floridians have had this experience: they get word from their homeowners insurance company - call it XYZ Florida Insurance - that their premium's going up because of huge losses. A couple weeks later, they see a story in the business pages about XYZ Insurance USA, based in Connecticut, reporting a big profit.

How's that? National insurance companies often carve out their Florida business into a separate company, insulating the parent company from losses in the hurricane-prone state.

Republican gubernatorial candidate Charlie Crist said Tuesday that the practice should end, and argued that national companies ought to spread the risk to other states, which he argues would help keep Florida homeowners' rates lower. "I think that's a shell game," Crist said in an interview with The Associated Press. "They have this fiction they create - a legal fiction that we can make illegal - that they will set up this separate Florida corporation which then gives them then the opportunity to go to the appointed insurance commissioner and say, 'Look at the horrible losses we've had' ... completely ignoring the fact that their national parent has been making billions and billions and billions." "It's ludicrous," said Crist, who is currently Florida's attorney general and vying with state Chief Financial Officer Tom Gallagher to be the Republican nominee for governor.

Insurance companies say it's not that simple and argue that if they had to charge higher rates elsewhere to make up for repeated losses in Florida they'd simply bail out of Florida. Many Florida policyholders don't realize that their big name Florida insurance company is separate from the "mothership" and when they find out, they don't understand why. "The answer is that otherwise the mothership wouldn't do business in this state," said George Grawe, an executive vice president at Allstate Floridian, which is technically separate from the national company, Allstate. "The reason that a company like Allstate needs to have the ability to operate a separate and distinct entity like Allstate Floridian is that otherwise we wouldn't be able to write home insurance policies in Florida." The Florida offshoots are known as "pup companies." They've been allowed in Florida since 1996, four years after Hurricane Andrew destroyed much of Homestead, causing $30 billion in damage. Companies were threatening to leave.

Gallagher, Crist's opponent in the Republican primary, generally agrees, having said the rules never should have been changed to allow such Florida-only companies. But he's also said during his campaign that now that they do exist, "the genie can't be put back in the bottle." Insurance regulators and company officials say that if the pups were shut down or forced to be absorbed by their national parents, not only would some pull out, the shareholders of the national firms would sue.

Grawe noted that before 1992, the parent Allstate did have policies in Florida, but "the losses sustained as a result of Hurricane Andrew nearly caused Allstate to become insolvent." Most large insurance companies have similar fears about Florida - which is why so many people here have problems finding a policy. "A company cannot allow one state to threaten their solvency," said Sam Miller, a spokesman for the Florida Insurance Council, which represents several property insurance companies.

Allstate Floridian and other large insurers have been bailed out by their parent companies on a few occasions in recent years. After the Florida company took a big loss from the 2004 hurricanes, its parent company pumped $300 million into it and provided backup again in 2005. Other companies have done the same, Miller noted.

Insurance companies also note that insurance companies are regulated at the state level - not nationally. That means they have to justify their rates to a state insurance regulator. And they argue that it would be hard for a company to go before a state insurance regulator in Michigan, for example, to argue it needs higher rates there to make up for hurricane losses in Florida, insurance executives say. Or, as Grawe put it, "The rate in the state is dependent on the loss you have in that state."

Meanwhile on Tuesday, a state panel appointed by Gov. Jeb Bush began a series of meetings aimed at making recommendations on what lawmakers should do to deal with rising home insurance costs and the difficulty homeowners and companies have in getting coverage. Democrats renewed calls for lawmakers to return to work on changing the law sooner, rather than waiting for the panel to make recommendations.

Democrats in the Legislature have suggested a state insurance fund that would pay out damages after hurricanes up to a certain point, at which time private insurance would kick in. That idea has been rejected by Bush and other Republicans as unworkable. "While Republicans stall waiting for yet another unelected commission, homeowners and small businesses continue to be hammered by insurance company rate increases," said Rep. Dan Gelber, D-Miami Beach, who will be the House Democratic leader next year. "The only way to solve this problem is to bring everyone back to Tallahassee, lock the doors and demand a solution."

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