For all the complexity of the Legislature’s special session on insurance, one point is clear: Floridians will get better legislation if insurance agents don’t write all of it.
In the House, the Job and Entrepreneurship Council oversees several legislative committees, including the Insurance Committee. The council chairman is Rep. Don Brown, R-Defuniak Springs. The council vice chairman is Rep. Ron Reagan, R-Bradenton. Both are insurance agents. Rep. Reagan also is chairman of the Insurance Committee. A member of that committee is Rep. Priscilla Taylor, D-West Palm Beach. She’s an insurance agent. Last year, Rep. Brown led the effort in the House to pass a bill that did much for the insurance industry but comparatively little for consumers.
It’s hardly new for lawmakers to serve on committees that make laws affecting their own businesses. In the Florida Senate, for example, a citrus grower is chairman of the Agriculture Committee. The same is true with the House Agribusiness Committee. But while such legislators may bring expertise, they also bring an inherent conflict of interest. With insurance, the biggest issue facing Florida, there is no bigger conflict than the wish of insurance agents to keep the price of policies high and the wish of Floridians to have them come down.
What happens when insurance agents set state laws on insurance? Last year, the Legislature required Citizens Property Insurance Corp., the state-run insurer of last resort, to set rates that are “actuarially sound” and would enable Citizens to cover a one-in-75-year storm - basically, a worst-case scenario. That meant much higher rates for the company into which private insurers have dumped many higher-risk policies. That meant many unaffordable rates for captive policyholders in Southeast Florida.
But as The Post reported Monday, those higher premiums have meant higher commissions for the 8,500 private insurance agents whom the state allows to write those Citizens policies. From $132 million statewide in 2005, commissions are projected to be $237.7 million for 2006 when all the numbers are in and $357.5 million for this year. Since state law requires Citizens to have the highest rates in the state, premiums for private policies also have increased, along with commissions for agents writing private policies.
Yet this year, six different House Republicans are sponsoring the six insurance-related bills. They would revamp Citizens, increase the amount of reinsurance for private companies with the idea of lowering their premiums from the savings, expand the state program for hardening homes, prevent private companies from doing business selectively (”cherry-picking”), toughen the building code and call for a national disaster fund. Each bill has a Democrat as prime co-sponsor.
The sponsor of the rate reduction bill is Rep. Dick Kravitz, R-Jacksonville. He’s an insurance agent. House leaders, however, say that the industry will not control the outcome. If that’s the new policy, policyholders will be grateful.
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