Ya think it's bad now? Insurance is just going to get worse.. Business insurance is damn near impossible to get in S Florida now, and the few companies writing it are not cutting us ANY SLACK.. The price of insurance is going to drive the smaller companies out of business...
Originally Posted by Sun Sentinel 8-8-2006Insurance companies shower Fla. politicians with donations to get rate hikes
By Mark Hollis
South Florida Sun-Sentinel
August 8, 2006
TALLAHASSEE -- Florida's teetering property insurance industry got what it wanted this year from the state: new power to raise consumer prices.
The Legislature crafted the industry incentives as insurers poured hundreds of thousands of dollars into election campaigns of lawmakers, state political parties and candidates for statewide offices.
Insurers now can automatically raise prices for homeowner coverage 10 percent without any state review. And to make Florida even more enticing to property insurers, legislators tossed in $250 million in loans for insurers willing to expand in this state.
The changes have been hailed across the country by the insurance industry as a big help to do business in a hurricane-battered state.
Consumer activists say it was a giveaway to an industry that already gets its way in Tallahassee.
Analysts say the legislation was not a surprise, given the industry's consistent political donations.
``It's always hard to say that the money bought something specifically, but the money certainly buys the industry access to decision-makers,'' said Sue O'Connell, research director for the Institute on Money and State Politics, a nonpartisan watchdog group based in Montana. ``It opens doors and allows them [insurers] access in a way that the typical citizen may not have. It also seems pretty clear from the way that industry distributes its donations that Florida is a pretty important state to the insurance companies.''
Since 1996, the property insurance industry has given $11.2 million to Florida candidates and state political parties, with roughly three of every four dollars to Republicans, according to research by the South Florida Sun-Sentinel.
The 2006 campaigns already have received at least $1.7 million from the property insurance industry, state records show.
O'Connell has examined property insurance industry campaign contributions across the country over three election cycles -- 2000, 2002, and 2004 -- and found Florida is vital to the property insurance market, judging by where the industry spends its campaign donations.
She said that in 2004, Florida ranked No. 10 among all states in total contributions from political donors. But in candidate contributions from the property insurance industry, she said, Florida politicians ranked second in the nation, behind only California that year.
Most donations to GOP
The insurance industry has given the bulk of its money to the party in power, the Sun-Sentinel has found. At least $4 million has been given in the last decade to the Republican Party of Florida, mainly from industry trade groups and associations but also from insurers, their lobbyists and executives.
By contrast, the Florida Democratic Party received slightly more than $1 million.
The contributions represent a small fraction of what's given each year to state parties and candidates in Florida. Other industries, such as telecommunications businesses, home builders and real estate agents, give more. Sun-Sentinel research found that about 2 percent of what's been given to all Florida campaigns and state parties since 1996 -- or $11.2 million of more than $557 million -- can be reported as having come from the property insurance industry.
Campaign finance analysts say the Florida insurance industry still packs a political wallop. That power was on display May 16 when Gov. Jeb Bush signed into law the 156-page property insurance bill that guarantees higher policyholder costs and bigger insurance industry profits.``This is the most significant, comprehensive property insurance legislation that has been enacted since Hurricane Andrew,'' said Len Brevik, the national executive vice president and chief executive officer of the National Association of Professional Insurance Agents. He said it's ``precisely the kind of innovation'' that Congress should mimic.
Critics call it a politically timid and anti-consumer answer to what ails Florida's insurance market. The law has been criticized in recent weeks by Democratic candidates for governor and some Republicans, such as state Rep. Randy Johnson of Winter Garden, a candidate to be Florida's chief financial officer.
``The insurance crisis has crept on the kitchen tables of Floridians and they are mad about it and responding to it. ...,'' Johnson said of reaction to increased rates. ``It is about insurance company greed, plain and simple.''
While some candidates criticize the law as an industry sellout, Florida's top insurance regulators, such as state Chief Financial Officer Tom Gallagher, a Republican running for governor, say it was just the start of a solution. His 2006 gubernatorial campaign has received at least $379,000 in donations from the insurance industry. Only the Republican and Democratic state parties and Bush's gubernatorial campaigns have received more money from the state's insurers than Gallagher has taken in for his 2006 race for governor.
He also has received at least $369,000 in industry donations during previous campaigns for other state offices, including the one he holds.
Gallagher campaign aides say Gallagher is not beholden to the insurers.
``No one has been more forceful and cracked down on insurance companies more than Tom Gallagher,'' said Alberto Martinez, Gallagher's gubernatorial spokesman. ``He's called State Farm and Allstate out on the carpet whenever they've tried raising rates and not responding to their customer's needs. ... Tom has a record of fighting for consumers and a record of speaking his mind.''
Campaign finance records show Jeb Bush's campaign for governor in 2002 received at least $201,000 from the property insurance industry. This year, he gave legislators surprisingly little guidance on how to fix the state's troubled property insurance market.
During his State of the State speech in early March, Bush called for better hurricane preparedness but provided no direction about insurance issues, including what to do with financially troubled Citizens Property Insurance Corp. Citizens is the state-run home insurer, and now the state's biggest property insurer. Its size is a sore point the state never intended.
When Bush signed the new property insurance bill into law, he knew consumers wouldn't be happy. ``I will accept responsibility that we will have higher rates,'' Bush said.
Bush and Republican legislators made their first move when they created the Task Force on Long-Term Solutions for Florida's Hurricane Market prior to the 2005 hurricane season.
The 13-member task force conducted eight public meetings. The panel of mostly insurance industry insiders overwhelmingly recommended short-term, industry-friendly solutions, only some of which were adopted.
In a 58-page report, the task force repeatedly called for what the Florida property insurance industry wanted -- ``greater flexibility'' with regulators. ``The majority of the people on the task force had some industry tie,'' said Steve Burgess, a task force member and a consumer advocate who works under the state Office of Insurance Regulation.
`Afraid to be bold'
Some legislators, insurance industry lobbyists and analysts say lawmakers settled on the bill because of their concern about doing more harm than good.
``The single biggest issue that will cause the state's economy to stop is not handling this insurance situation correctly,'' said Sen. J.D. Alexander, a Lake Wales Republican on the Senate Banking and Insurance Committee. Records show Alexander, who helped negotiate the final bill, has accepted at least $95,000 in donations from insurance interests to his political campaigns since 1996.
Bush says Florida is better off with the law than nothing.
``It's not easy to make the tough choices,'' Bush said. ``If we had not made the tough choices this year, it would have come back to haunt us.''
Others don't see it that way.
``A lot of these issues are technical. So a lot of legislators aren't comfortable with certain things. When an insurance company lobbyist says `this and this,' it's pretty difficult for someone who is not an expert to know that they are lies,'' said Birny Birnbaum, an economist with the Center for Economic Justice, in Austin, Texas.
Robert Hunter, director of insurance for the Consumer Federation of America, said: ``The (Florida) Legislature is afraid to be bold. They were so afraid that the industry is going to bolt that they won't take the kind of action that needs to be taken.''
Business writer Kathy Bushouse and staff researcher Jeremy Milarsky contributed to this report.
Mark Hollis can be reached at [email protected] or 850-224-6214.