Democratic Governor Hopefuls Take Stance On Insurance Issue

By MICHAEL FECHTER The Tampa Tribune

Published: Jul 11, 2006

They live on high ground and have made a improvements to protect their home from hurricane damage.

But insurance companies keep dropping Gerald and Janet Goen's homeowner's coverage. Their premiums go up each time they find a new provider, even though they've never had a claim.

The Goens, who moved to Florida from Indiana 12 years ago, are becoming some of the most sought-after voters in the governor's race.

On Monday, they traveled from Tarpon Springs to St. Pete Beach to hear Democratic Congressman Jim Davis' proposals for property insurance reform. An hour earlier, state Sen. Rod Smith unveiled his own reform proposal and took a few swipes at what Davis is offering.

Issues Have Shifted

Both candidates say they are hearing about insurance concerns more often as they campaign. Though the first phase of the campaign was devoted to education, the debate clearly has shifted.

"It's not an issue anybody can ignore who's running for office that has anything to do with it," said Democratic pollster and consultant Jim Kitchens.

"People are getting the word, a big bill is coming in, and it's going to whack you," he said.

Davis started holding roundtables on insurance last month and will hold four this week. Monday, he met with about a dozen home and business owners at Oyster Shuckers, a bar and restaurant that overlooks the Gulf of Mexico.

He has proposed a Policyholders Bill of Rights that calls for a consumer advocate on insurance inside the governor's office. In addition, he wants annual independent audits of Citizens Property Insurance Corp., the state-run insurer of last resort, to make sure rates are fairly assessed and claims paid.

Davis also proposes tax credits or other incentives for people such as the Goens who gird their homes against storms.

Perhaps the most controversial proposal is the closing of what Davis calls a loophole between wind and flood insurers. Legislative changes from 2004 can leave the two sides pointing at each other, refusing to pay a policyholder's claims.

Both candidates endorse the idea of a national catastrophic fund and say they'd work with other governors to lobby Congress to create one.

Smith dismisses many of Davis' proposals as "bumper sticker slogans" that won't bring insurance companies back to Florida and could lead to higher rates.

The state shouldn't be in the insurance business, he said, but should find ways to make Florida a more attractive market for insurers.

Citizens fell $1.7 billion into debt after last year's hurricanes. In May, legislators voted to use $715 million from the state's budget surplus to reduce the debt.

Under Smith's plan, the state would cover claims up to either $50,000 or $100,000. That takes care of 60 percent to 80 percent of all claims in a typical hurricane, he said.

Property owners still would pay their premiums to insurance companies, but part of that money would go to a state trust fund. When a claim is filed under the threshold, insurers would serve as conduits, paying the money from the state's fund.

"We would serve as the first deductible for the insurance companies," Smith told reporters in a conference call.

He also wants to create an independent insurance commission, similar to the body that helps set utility rates, to hear rate requests. A public counsel would be appointed to look after consumer interests.

He also wants the state to devote 80 percent of all sales tax money from storm preparation and repair spending to shoring up Citizens insurance and to fueling a separate catastrophic fund. That fund would help offset costs if Florida were to be hit by a devastating storm like Katrina.

"It will provide a major financial incentive for private insurers to step back into the market," Smith's plan says.

Davis Says Focus On Policyholders

Davis' campaign jumped on that statement, issuing a release saying, "We need fewer 'incentives' for insurance companies and more protections for homeowners and business owners. There are plenty of people in Tallahassee who look out for the insurance companies but after looking at this plan, it's clear there's only one Democrat running for governor looking out for the rest of us."

Davis had supporters in his meeting, but also people who were neutral or not involved in the Democratic primary.

Keith Overton, a Republican, said it used to cost $800,000 for $120 million in insurance coverage at the TradeWinds Resort where he is general manager. His premiums more than tripled to $2.8 million in exchange for only $40 million in coverage.

If he passes the price increase on to his guests, they'll likely go elsewhere, he said.

"How long can we take a $2 million hit every year?" he asked. "We can't."

That shows Florida's insurance crisis can have far-reaching effects on the state's economy, Davis said.

"These problems have been around for years in the Legislature," Davis told reporters. ""I haven't heard a lot of people talking about fixing them until now."

Details of the respective plans may matter less than the fact that the candidates are talking about the problem, Kitchens said. Most voters don't invest the time comparing and contrasting candidate proposals.

"If somebody captures the imagination of the electorate, they can ride it to the governor's chair," Kitchens said. "I truly believe that."

Reporter Michael Fechter can be reached at (813) 259-7621 or mfechter@tampa

JIM DAVIS PROPOSES

•A Policyholders Bill of Rights that calls for a consumer advocate on insurance inside the governor's office.

•Annual independent audits of Citizens Property Insurance to make sure rates are fairly assessed and claims paid.

•Tax credits or other incentives for homeowners who gird their homes against storms.

ROD SMITH PROPOSES

•That the state cover claims up to either $50,000 or $100,000.

•An independent insurance commission to hear rate requests. An appointed public counsel would look after consumer interests.

•That the state devote 80 percent of all sales tax money from storm preparation and repair spending to shore up Citizens insurance and fuel a separate catastrophic fund.

trib.com.