Regulators to fast-track insurance pool

TALLAHASSEE, Fla. -- Aug. 2, 2006 -- Gov. Jeb Bush and the Florida Cabinet on Tuesday voted to let state regulators fast-track a plan to create a state-run insurance pool to provide emergency property insurance for thousands of businesses throughout the state that have lost their insurance in the midst of hurricane season.

The move will allow the state to re-activate the state-run commercial insurance pool, known as a joint underwriting association or JUA, to offer companies stop-gap insurance as a last resort to Florida businesses. The coverage would be financed by insurance premiums and bonds.

The governor and Cabinet also want a task force convened by the governor to explore legislation that would make insurance more affordable by making it easier for private carriers to buy reinsurance -- insurance for insurance companies -- from the state rather than the more expensive private market.

The governor has agreed to call a special session of the Legislature if an agreement can be reached on short-term solutions that strengthen the private insurance market.

"I'm more than happy to look at any idea," Bush told the Cabinet, noting that even a plan pushed by the Democrats should be on the table. "I don't think this is the time to be pre-judging ideas."

An informal Internet-based poll of Florida businesses conducted by the Office of Insurance Regulation found that 42 percent of the 1,900 businesses that responded had their property insurance either canceled or non-renewed by their insurer in the past six months.

While most were able to secure new coverage, 49 percent said they had to pay much higher rates or accept less coverage, or both, and 17 percent could not find coverage at any price.

Some businesses told state officials they are considering relocating their businesses to other states because of Florida's insurance difficulties.

Bush said he wants to pull out all the stops to find a workable solution fast to avoid the economic problems that would result if thousands of Florida businesses would have to shut down because they can't find insurance coverage.

The JUA was created to deal with an insurance crisis in the mid-1980s, but was deactivated. The law allowing it, however, is still on the books and state regulators told Bush and the Cabinet on Tuesday that it may take at least a month before the rules can be written to make it operational again.

Insurance companies offered mixed reactions to the idea, warning that the stop-gap solution should not serve as substitute for finding ways to reinvigorate the private market.

"We consider a commercial JUA to be a temporary, short-term fix for the current availability problems in the commercial property market," said Cecil Pearce, the American Insurance Association's vice president for the southeast region.

Bush told Cabinet colleagues he hopes a task force he has assembled will come up with recommendations that will lay the groundwork for the Legislature.

"If we have enough consensus that these ideas will have a positive impact, we need to call a special session and add to the stuff we've already done," Bush said.

Among the ideas that Bush and Cabinet members said the state should focus on: providing more financial incentives for homeowners and businesses to harden their homes against wind damage; leveraging federal rebuilding money to pay for hardening homes and businesses; and increasing the amount of state matching money loaned to small insurance companies that want to write policies but don't have the required capital to operate.

"I think what's happening is we're getting to the breaking point on homeowners insurance, as far as cost goes," said Tom Gallagher, the state chief financial officer. He wants lawmakers to make it easier for insurance companies to tap into the state's reinsurance fund, known as the Hurricane Catastrophe Fund.

Bush warned, however, that the creation of another state-run JUA for commercial property has the potential to bring the state deeper into the primary insurance business, exposing the state to more risk if a storm should hit.