Insurance Reform Post-Session Battle Begins

Lawmakers, interest groups tussle as Gov. Rick Scott ponders bill
By: Gray Rohrer | Posted: May 17, 2011 3:55 AM
Senators Mike Fasano and Garrett Richter

Sens. Mike Fasano and Garrett Richter

The expiration date on the 2011 legislative session is more than a week over the limit, but the insurance industry and consumer advocacy groups are not done fighting yet.

The groups are battling over SB 408, the one piece of substantive legislation that made it to Gov. Rick Scott’s desk this year, despite massive, veto-proof Republican majorities in both chambers dedicated to pro-business policies that included reforming the private insurance market.

Last week Sen. Mike Fasano, R-New Port Richey, who was largely responsible for halting the more aggressive insurance reform measures, sent out a press release urging his constituents to call Scott and ask him to veto the bill.

SB 408 is largely a rewrite of 2010’s SB 2044, which was vetoed by then-Gov. Charlie Crist, but the new version includes provisions to rein in rampant sinkhole claims that have spiked in recent years and are at the heart of private insurers' rate increase requests.

In his release, Fasano contended that provisions in the bill allowing for insurance companies to recuperate reinsurance costs, “virtually guarantees a 15 percent premium ‘reinsurance’ increase.” He called the rate hike a “backdoor tax and fee increase.”

Sen. Garrett Richter, the bill’s sponsor, quickly hit back, alleging that Fasano’s claim on reinsurance increases was “a false statement.”

“I cannot simply watch from the sidelines as a 17-year career politician mischaracterizes and demonizes badly needed public policy reform,” Richter said.

The bill, Richter noted, simply allows for a maximum 15 percent rate increase related to reinsurance costs, to be reviewed and subject to the approval of the Office of Insurance Regulation. Reinsurance, or the insurance that companies buy in order to be able to pay out claims if their reserves are tapped out in the event of a catastrophic natural disaster, is only one factor in a company’s overall rate increase request.

For his part, Fasano called Richter a “dear friend” and shrugged off being called a “career politician.”

“I’ve been called worse,” he said.

Property insurers responded quickly, calling Fasano’s call for a veto a “crusade.”

“Calling on the governor to veto this bill may make a good sound bite, but it’s not a sound decision, and it does nothing to move Florida forward or protect homeowners,” said William Stander, assistant vice president of the Property Casualty Insurers Association of America.

Consumer advocates joined the fray Monday on Fasano’s side, bemoaning SB 408’s other measures that reduce the period customers have to file claims from five years to three years for hurricane damage. Sinkhole victims have two years to file. The bill also allows insurers to offer cheaper policies that let them withhold payment of a claim until a homeowner contracts to get repairs made.

“I commend Senator Fasano for standing up for consumers and join in his call for Governor Scott to veto SB 408, a bill guaranteed to raise insurance rates in Florida and make it harder for Floridians to file claims,” said Sean Shaw, founder of Policyholders of Florida, a consumer advocacy group for the private insurance market.

The chances of a veto from Scott, however, appear slim. He has stated consistently his desire to get the insurance industry more in line with free-market principles by ushering customers out of state-run Citizens Property Insurance Corp. Richter said the bill will do just that.

“We’re still looking at the details of that bill. We’re still looking at the specific language, but on general principle, we support it,” said Scott spokesperson Lane Wright.

Yet Fasano, who helped kill bills that would have prevented Citizens from insuring expensive properties and allowed for annual rate hikes for Citizens' customers greater than the 10 percent maximum allowed under current law, is still holding out hope for a veto.

“I hope the governor understands -- and I believe he will once he looks at the bill further -- that this is no different than a tax increase or a fee increase,” Fasano said.


Reach Gray Rohrer at or at (850) 727-0859 begin_of_the_skype_highlighting (850) 727-0859 end_of_the_skype_highlighting.

Comments (3)

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11:38PM NOV 28TH 2011
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Charlie Crist lover
10:22AM MAY 17TH 2011
Fasano is a cry baby and a sore loser. He's exaggerarting the impact of the bill to scare people into giving him his way. Gov Scott won't fall for this BS. It's a publicity stunt for Fasano.

I hope that when the next big hurricanes hit Florida and Citizens doesn't have enough money to pay claims, everyone will remember that Fasano single-handedly killed the Citizens bill that would have brought the state-run insurer closer to financial stability. While he may have save his constituents in Pinellas some money, he screwed the rest of us.

Fasano is on the Charlie Crist leadership track to obscurity. Hopefully, he will soon declare his independence.
9:59AM MAY 17TH 2011
If the governor lets these parasites in the insurance industry have open access to our wallets, the housing market in Florida will crash even further.

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