The same day that a global credit rating agency predicted the Florida homeowners insurance market could collapse if a major hurricane strikes, state Rep. Don Brown continued his crusade to sound alarms over how last year's insurance reforms — which created that market — put the entire state's economy in peril.
Rating agency Fitch Inc.'s position, which mirrors that of the insurance industry and is something lawmakers and other rating agencies have long acknowledged, is that a massive hit would force the state to borrow billions and tack on assessments to all Florida policyholders to help pay claims.
Fitch also took a shot Monday at the smaller, newer insurance companies moving into the state, accusing some of having low financial ratings. And it criticized the "growing adversarial relationship'' between insurers and regulators.
Gov. Charlie Crist would later sharply criticize that assessment.
But it was Brown, a DeFuniak Springs Republican, an insurance agent and chairman of the House Committee on Insurance, who again put a face on the issue. After holding a similar hearing last week questioning state-backed Citizens Property Insurance's ability to pay claims, Brown and his committee spent much of Monday afternoon trying to coax Florida Office of Insurance Regulation chief actuary Bob Lee and Deputy Insurance Commissioner Belinda Miller to admit the state should allow insurers to increase premiums now rather than risk higher assessments in the event of a major storm.
Last year, Florida lawmakers voted to expand the state's catastrophe fund by $12-billion to give insurance companies access to cheaper backup coverage, with the savings passed to policyholders. Brown and Rep. Dennis Ross, R-Lakeland, were the only two lawmakers who voted against the measure.
At one point, both sides went back and forth for nearly 10 minutes over the definition of the term "actuarially sound."
Rep. Alan Hays, R-Umatilla, questioned whether the state is doing enough to tell homeowners that if they don't pay enough for insurance now, they could later be forced to pay assessments that are much higher. "Shouldn't we tell them," Hays asked, "about the corner we've backed them into?"
Insurance regulator Miller said notices of past assessments are listed on premium statements. "And how else can we do it?" she added. "That's the way it (the law) was created."
Of the 14 members of the insurance committee, three are insurance agents (Brown and Reps. Priscilla Taylor and Bryan Nelson), and Ross is a lawyer whose firm represents insurance companies.
Crist, a leading proponent of expanding the state's exposure to risk to lower homeowners rates, had harsh words for the Fitch report.
"I don't know what Fitch is," Crist said. "What I can tell you is that from a consumer point of view, it's better than it was for Florida even a year ago.
"Florida property insurance is about 16 percent cheaper than it was just a year ago," Crist said. "Ironically, 16 new companies are operating in Florida since the reform that happened last January, giving more choice to consumers, more opportunity for lower rates and more coverage for more Floridians.
"So, no disrespect to Fitch," he added, "but what I care about more is Johnny and Susie Floridian than Fitch."
Asked what he thinks of efforts by Brown and others to pass legislation reducing Florida's exposure, Crist said he's had discussions with catastrophe fund officials to do just that.
"But raising rates," Crist said, "is not an option."
Times staff writer Steve Bousquet contributed to this report. Tom Zucco can be reached at [email protected] or (727) 893-8247.