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Posted on 08/15/2006 12:46:14 PM PDT by JulieRNR21
Sen. Tom Lee and Rep. Randy Johnson disagree about how to attract private insurers back to the state.
By DALE WHITE
dale.white@heraldtribune.com
Two Republican contenders to be Florida's next chief financial officer disagree about how to attract private insurers back into a state where millions of home and business owners are scrambling to find adequate, affordable coverage.
Senate President Tom Lee of Brandon calls for expanding state support to insure businesses that can't get coverage. Ultimately, he wants to get the state out of the policy-writing business and make it a source of the reinsurance that the private sector can't find from its usual underwriters.
State Rep. Randy Johnson of Celebration calls for extensive deregulation of the insurance industry, which he believes will enable smaller companies to compete with monolithic companies that have controlled the Florida market for decades.
Either candidate, if elected to oversee Florida's Department of Financial Services, would require support from the Legislature and the next governor to get his agenda through.
They shared their views on Monday with the Argus Foundation, a Sarasota-based association that promotes economic development.
Lee emphasized that there must be "government support in the short term to keep this economy going."
He wants to revive a state-backed Joint Underwriting Association to provide insurance for businesses that have lost their coverage.
Johnson said that idea creates another Citizens Property Insurance Corp., the state-backed agency that is Florida's largest provider of homeowners insurance.
Insisting that it is not being run "like a business," Johnson called for "a top-down audit" of Citizens' management, financing and outside contracting.
Johnson argued that Lee is part of a "status quo" that will not undertake the sweeping measures needed for genuine reform.
He wants to throw out hundreds of pages of statutes and administrative codes that he says protect "a monopoly" of about six major insurers and effectively block smaller insurers from competing in Florida.
"They can't get here because it's unfair," said Johnson, who has received the endorsements of incoming House Speaker Marco Rubio of Miami.
"This is going to take more than bumper sticker solutions," said Lee, whose supporters include Gov. Jeb Bush, outgoing House Speaker Allan Bense of Panama City and Senate Majority Leader Daniel Webster.
Lee agreed with Johnson that Citizens must become "actuarially sound." A devastating hurricane could potentially expose Citizens to $30 billion in unfunded losses, he noted. "That will bankrupt the state. We have to depopulate Citizens."
He insisted that the state can best bring back private insurers by offering them the reinsurance that they can't get from underwriters such as Lloyd's of London.
Johnson wants to encourage insurance companies to "bundle" their policies so that, in one package, their customers can get auto, health, life and property coverage -- at a significant savings.
Yet Lee contended that encouraging insurance companies with no experience in writing homeowner policies to enter that field could result in their having to subsidize losses by raising rates for their other coverage.
Lee and Johnson are vying to replace Tom Gallagher, a Republican candidate for governor, as head of the office that oversees insurance, banking and other industries.
Milton Baugess of Tallahassee is also running in the GOP primary on Sept. 5. The winner of that race will face Democrat Alex Sink in November.
FL Insurance Discussion......PING
Republican Candidates for FL CFO....Sen. Tom Lee and Rep. Randy Johnson disagree about how to attract private insurers back to the state.
Something has to happen. Not only do the rates keep going up they (insurance company) just raised the insured value of my home to over 100K. GET REAL this is a 1956 stick built 1300 sqft house. I bet I could have it rebuilt for a lot less than 100K.
More on FL Insurance.......PING
Perhaps Lt. Gov. Toni Jennings' committee can come up with satisfactory answers for homeowners...more brains the better. Lots more public discussions needed too.
I hear ya.....the rates are going up & the assessments as well....everywhere in FL.
Looks like the insurance companies get to fleece the taxpayers again.
The winner of the GOP Primary for CFO will face Democrat Alex Sink in November.
Anyone remember Alex Sink?
She's the wife of Dem Bill McBride who failed to beat JEB in 2002 despite Bubba Clinton & Jesse Jackson coming to FL to campaign for him.....I recall the dire predictions in the press that the Dems were going to 'destroy' JEB because of the 2000 Election!
Never happened!
DITTO & BUMP......
What like what the state did and does with Citizens? The state legislature, in large part, is responsible for how Citizens was run. In the last year, they did some serious housecleaning of some unsavory initial hires, but have since put some good people in place.
Unfortunately, the company isn't run as a business; rather, it is specifically run as a gubmint-controlled entity. The company can't have any strategic vision and goals because the whims and rhetoric of the politicians in the legislature, who control the company's direction, change as soon as the wind blows.
No business can operate if they had to change strategy everytime a few Sinators woke up on the wrong side of the bed. That's one of the reasons why Citizens is having troubles. There are a lot of logistical things that get started only to be change by some bureaucrat.
Not only do the rates keep going up they (insurance company) just raised the insured value of my home to over 100K. GET REAL this is a 1956 stick built 1300 sqft house. I bet I could have it rebuilt for a lot less than 100K.
You may think that, but chances are you couldn't. First, if you were to be hit with a loss, your company is REQUIRED to rebuild to current ordinance and laws. That means your 1956 home will face a nearly complete makeover. This isn't cheap. Second, if there was a loss, the first thing that happens is EVERYTHING required to re-build goes up 30% because of demand. So, you might be sitting there, calculating up what it would cost you based on prices that you've seen down at The Home Depot, but that won't cover it in loss situations.
You want low homeowner's insurance, move to northern New Mexico or Arizona. You want/need to live in Florida, you are just going to have to deal with it...just like the rest of us.
This from the wife of the education candidate...
I am for deregulation. Let me buy fire and theft, even if I can't afford hurricane. Let insurance companies compete. Get the pols and lawyers out of their hair.
Lots more INFORMED public discussions needed too.
There are a lot of aspects of the insurance industry that homeowners don't understand, and frankly, why would they. Most people have a lot going on in their life.
Let's face it, understanding insurance is boring stuff. I mean, having a detailed explanation of what actuarial tables are (not even why their accuracy is really important) is about as delightful as scraping a cheese grater across your ears. I mean, having this discussion is akin to being force-fed highly potential sleeping pills en masse.
And, having a public that is more concerned with who the next American Idol is doesn't help the public debate.
It's a lot easier for the public to cry foul and blame the big, "eevil" insurance company. If presented with similar economic choices, most consumers would be making similar choices than the insurance carriers are making. Getting the consumer to see the equation is the difficult, if not impossible, task.
And, yes, I used to work for an insurance company; no, I don't anymore; and, no, I didn't collect your premiums all of those years and buy a yacht and 2 island homes.
And, I'm not saying it's peachy-keen in the Florida insurance market and there's nothing to be worried about. However, if public discussion is needed, then it needs to be informed discussion.
You can buy that. It's called an X-Wind policy. It covers you for all the other "stuff" (Fire, Theft, Water Damage [not caused by wind damage], Vandalism, etc.).
These policies are typically much cheaper because the Wind peril isn't an issue.
Let insurance companies compete. Get the pols and lawyers out of their hair.
Outside of hurricane/catastrophe destruction, fraud and the skyrocketing increase in litigation has been the greatest reason why insurance has gone up, up, up.
And, I think that litigation is mostly the culprit. The litigation spurred on legislation. Then, the loophole to the legislation spurred on more intense (and lucrative, in some cases) litigation. Then, closing the loophole meant more legislation. Then, more loopholes are spotted and the litigation gets more precise. Then, the legislation has to be more precise.
And on, and on, and on...
It's the reason why they are so involved with the industry.
There is a legitimate downside to de-regulation. There are actually many insurance companies that can write full policy business in the state of Florida; however, there aren't many who will write full policy coverage.
And, if 6 storms have ripped through the state in the last 24 months, causing billions and billions in damage, do you blame them for taking a pass? As I noted in the other post, it's an economic decision that most reasonable people would decide against also, if they were faced with similar facts.
And, having smaller companies actually is worse, as smaller companies can not spread the risk across larger geographical areas that might balance out premiums to losses. It's not an "easy" thing. It is complex, which is why the public understanding can be difficult.
Yes indeed!
That thread was a hoot.....thanks for the memory!
Since she couldn't spell...makes me wonder if her math is any better?
Certainly math skills are important for a CFO....LOL
Both in home-owners insurance and in health insurance it is the legislators mandates that make it prohibitively expensive. My point is that they don't know as much as insurance professionals and they listen to political imperatives that are not actuarially sound. That is why you end up with Citizens which is not really an insurance company, at all.
Unfortuantely, a lot of conservatives who should know better, get talked out of believing that the masrket works best in certain cases. Try it. You'll like it.
You can buy that. It's called an X-Wind policy. It covers you for all the other "stuff" (Fire, Theft, Water Damage [not caused by wind damage], Vandalism, etc.).
These policies are typically much cheaper because the Wind peril isn't an issue.
Never happened!
Same "bongo-drums" are recycled against Ms. Kathrine Harris!!!
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