Letter from Washington: Some Florida reforms pass, but much work left to do

by Eli Lehrer on March 13, 2012

As much of our other coverage shows, the Florida Legislature did pass some substantive insurance reforms during its just-completed 2012 session: a personal injury protection bill that mends PIP without ending it (a key priority for Heartland) passed the Legislature. So did useful reforms to the Citizens Property Insurance Corp. that change the way it imposes assessments (special taxes) on private market policies. Clearly, Florida’s insurance system will be in better shape than it was last year.

All that said, the legislation that passed won’t fix the deep underlying problems: a Florida Hurricane Catastrophe Fund that can’t pay its likely liabilities and a Citizens that still has far too many policies. Legislation to reform the Cat Fund in a serious manner and allow excess and surplus lines companies to do take-outs from Citizens both died in committee.  In the coming year—probably by summer—Heartland is going to be presenting new ideas for fixing both Citizens and the Cat Fund. I’ll be writing a more detailed paper during the summer but, for now, here’s what I tend to think Florida should do:

  • Excess and surplus lines take-outs: The bill that recently failed was a good start but there’s still a good deal more that could—and should—be done. The E&S industry has to do a much better job explaining to the Legislature and the public what it does. The Citizens take-outs have to be transparent enough that nobody gets suckered into doing them.
  • Cat Fund reform: In 20/20 hindsight, I think that the mistake that people pushing for a Cat Fund bill made was to start with something that was too modest. The bill didn’t do enough to start with and, by the time all negotiations were done, the Legislature was left with something that didn’t fix the Cat Fund at all. Given that the private reinsurance market (luckily) concludes most contracts after the legislative session, there’s no problem with doing a bigger bill that makes more reforms and (unlike this year’s bill) has them take force right away. None of the bills proposed would have had a major impact on the 2012 hurricane season anyway. A 2013 bill, however, could have a significant impact during the 2013 hurricane season. And, for Florida, it’s an imperative.


At the end of next week, Heartland will be hosting an event on Rep. Eleanor Holmes Norton’s proposal to allow for federal income tax-free on-shore insurance catastrophe reserving in the District of Columbia. It’s an interesting proposal that I’ve always liked myself. It’s probably not going to solve the country’s catastrophic risk crisis by itself and, for me, it’s not the cure-all. But it’s a decent idea and, frankly, would do a lot of good for the region where I live.


A Heartland website isn’t the appropriate place to discuss specifics of elections. That said, it’s interesting to note that Mitt Romney’s campaign remains far ahead of Rick Santorum’s in the delegate count, despite the latter’s significant number of high profile victories. A lot of this has to do with the fact that Romney simply seems to have a strategy more focused on delegates themselves and, just as importantly, the money to implement it. This past Saturday’s elections are a perfect case in point:  Santorum got the headlines and the biggest single prize of the day by winning the Kansas caucuses and 30 delegates. But Romney won the all of the delegates and had truly overwhelming margins in the Northern Marianas Islands (9 delegates), Virgin Islands (3), and Guam (9). Santorum’s net pickup, therefore, was only 9 delegates.

This is going to be a long primary fight, to say the least. And most of Washington, on both sides of the aisle, is going to be watching very closely.

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