The lineup is set. Allstate and Hartford take the stand Monday; Nationwide, Florida Farm Bureau and American Strategic Insurance appear Tuesday.
The only question left is the biggest: What will a panel of state senators discover when it asks insurance company executives why rates for some companies have fallen, while others have not?
The Senate Select Committee on Property Insurance Accountability chose two companies that lowered rates (American Strategic and Nationwide), and three that have asked for rate hikes (Allstate, Hartford and Farm Bureau). Executives from all five insurers have confirmed they will appear to answer questions from the 20-member panel regarding issues like claims history, compliance with last year's legislation, hurricane risk modeling and profitability.
The senators say they'll take a hard-line approach. In a Jan. 25 letter to the companies, the committee noted its members "will find it unacceptable if intra-company finger-pointing or the unavailability of key executives results in questions going unanswered.''
A key executive who will be available is John Auer, chief executive of St. Petersburg-based American Strategic. ASI, the committee points out, is an example of how the law can work. The company lowered its rates an average 23.9 percent statewide, and with about 250,000 policies, it has passed Nationwide as the fifth-largest insurer in the state.
"A lot of legislators have their mind made up that the industry is all bad people,'' said Auer, who serves on the advisory council for the Florida Hurricane Catastrophe (CAT) Fund, the state's reinsurance pool that can be tapped to help insurers pay claims from major storms. "It's good that the industry's side of the story gets told.''
Even if that story is ominous.
The hearings come a year after the Legislature passed an insurance package that expanded the CAT Fund by $12-billion to a total of $28-billion. That meant companies could buy more cheaper, state-backed reinsurance and pass the savings on to policyholders. But expanding the fund left many experts wondering how Florida would pay for a mega disaster?
"I really took the CAT Fund on faith last year,'' Auer said. "I chose not to buy private reinsurance. I felt the state had put it there, and I had to depend on it and hope for the best.
"But I'm less comfortable with that. I'm going to look at buying private coverage this year because there is increasing concern about the state funding a $28-billion potential loss.''
Another problem, Auer said, is that if losses are catastrophic, the state might not have part of the CAT Fund money until months after a storm.
"To have a significant part of the program that I can't touch until December,'' Auer said, "is a pretty significant problem.''
Committee member Sen. Mike Fasano, R-New Port Richey, said he shares Auer's concerns. "But if we were hit with a major storm and had those kind of losses,'' Fasano said, "I feel pretty confident the governor and the Legislature will convene a special session to deal with it. And let's all be realistic. The federal government will be here immediately.''
For now, Fasano said, his focus is on rates. "Why did companies tell us that if we passed the legislation, premiums will come down?'' he asked. "They lied to us.''
Committee member Sen. Ted Deutch, D-Delray Beach, wants to leave the investigations to regulators and determine "whether the process works.
"I think there are plenty of burning torches in Tallahassee,'' Deutch said. "It's more productive for this committee if we are not the angry mob and instead behave like legislators trying to figure out the best way to find meaningful relief."
And, Deutch said, the clock is ticking.
"The Legislature is going into session in March. Hurricane season starts a few months later. We need to get information so we can act in the best way to ensure lower premiums.''
Tom Zucco can be reached at email@example.com or (727) 893-8247.
Company Rate change Status
American Strategic -23.9 percent Approved
Nationwide -4.5 percent Pending
Allstate 41.9 percent Denied
Hartford 29.5 percent Denied
Florida Farm Bureau 26.8 percent Denied
Source: Florida Office of Insurance Regulation