Insurance reformer is used to legislative storms

Miami Herald–June 16, 2008

BY BEATRICE E. GARCIA

Bill Posey learned about the insurance industry the hard way — by regulating it.

The Republican state senator from Rockledge put in two stints as chairman of the Banking and Insurance Committee. He wrestled with insurers to bring about significant changes in workers’ compensation, medical malpractice, personal-injury protection and property casualty.

His most recent stint as committee chair — since late 2006 — forced Posey to immerse himself in the nuances of rate filings, computer risk models, reinsurance and financial-strength ratings on insurers.

It wasn’t the best of times to take on that assignment.

Eight storms in two years had devastated Florida’s insurance market. Consumers and business owners were experiencing soaring insurance rates and disappearing coverage. A new governor and increasingly active consumers were agitating for solutions from Tallahassee.

Along with Senate colleagues Steve Geller of Cooper City and Jeff Atwater of North Palm Beach, Posey put the home-insurance industry in the hot seat this year. The process demanded two special sessions — a special Senate panel with insurance company executives under oath and subpoenaed documents — as well as work in two regular sessions.

The work product: two major reform bills. One was aimed at lowering rates; the second increased consumer protections for policyholders.

Posey is not one to be shy about speaking his mind. When a bill with significant reforms to the state’s auto-insurance law was stripped of its muscle in committee early in the 2007 session, he clearly wasn’t happy. “A bill that nobody likes usually means there is some good public policy to be found there. So, it got beat like a drum.”

He pushed on property insurance to bring about changes. He pushed for more consumer protections in this year’s bill. Yet, he couldn’t persuade the House to increase penalties substantially for insurers that don’t follow state laws.

Posey has resigned his state Senate seat and is running for the District 15 U.S. House of Representatives seat. He is vying for the spot with six other candidates, including three Republicans.

Posey talked with The Miami Herald recently about his time herding the insurance industry in Florida.

Q. What was your toughest legislative assignment?

A. My first assignment when I was elected to the Senate was chairman of ethics and elections [committee] after the 2000 presidential elections. I passed the best elections package in the nation. I was applauded by the National [Association of] Secretaries of State, and I’ve been the Local Supervisors of Elections guy of the year.

Property insurance was equivalent of doing that, workers comp, medical mal and PIP — all rolled into one. Incredible! In large part due to the negative spin the press has put on it, that makes it harder to sell the public on what we’re trying to do. The crisis would be over tomorrow if the media would embrace actually telling people that it pays to mitigate.

I haven’t heard of anyone who got an independent wind inspection, not a My Safe Florida Home [inspection], that hasn’t saved at least 25 percent. I’ve heard of hundreds who have saved over 50 percent. My personal experience has been 25 percent.

I can’t believe that everyone isn’t doing it, that the media don’t have this on the front page every day. Have you had a wind inspection yet? If not, you’re paying too much insurance.

Q. What didn’t get done?

A. I would have liked to have some stronger anti-trust language [in this year’s bill]. I’m really disappointed that didn’t happen this year.

I wanted to increase penalties [for insurers that violate the state’s insurance law] more than just doubling them.

But we’re getting rid of arbitration forever. I was one of the eight legislators out of 160 that voted against establishing that initially.

Use and file [which allows insurers to raise rates and then get state approval] — at least we suspended that for another year. We can come back next year and try to repeal [use and file entirely].

Q. The bill to reduce the size of the Florida Hurricane Catastrophe Fund, which would have meant less reinsurance for sale from the state, didn’t make it all the way this year. Was it the concern about possibly higher rates that doomed it?

A. Yup. But reinsurance rates [in the private market] have dropped so much I believe it would have been nearly a wash.

The small companies gave reductions of as much as 49 percent. The big ones — the national companies — gave reductions of 9 percent. They testified before our committee: “That Cat Fund didn’t benefit us.”

Q. Did having a special session in early 2007 help the Legislature focus on the insurance crisis?

A. The key was having a special session and it being absolutely transparent. In a regular session, you have all these other issues going on. You can have these moving targets here and moving targets over there. Stuff gets lost and people’s eyes get switched off the ball. But when you have a special session, you focus on nothing but insurance.

I told several reporters that it was going to be a transparent session. You’re welcome anywhere, anytime.

I got a letter from a lady from a Miami TV station. She told me that ”I have been doing this for so many years. But I’ve never seen a process this open.” It was open and everybody’s eye was on it. No one could run and hide.

Q. Did the change in administration in Tallahassee and more proactive consumers helped move insurance reform along in 2007 and 2008?

A. I don’t think the constituents wanted to do anything worse than we did. It’s not like everyone here doesn’t pay insurance. Everyone knew how bad it was.

The inland guys were obviously the foot-draggers. But 80 percent of the people live on the coast and 80 percent of their representatives live on the coast. They knew that it was a problem.

When I was dealing with workers’ comp, I wrote a 20-page paper on the nine kinds of workers’ comp fraud. And that is what we attacked in our bill. Rates that had gone up 100 percent a year, we brought them down 50 percent. If you bring down rates 50 percent, that means you have eliminated a 100 percent hike. [Workers’ comp] rates are now back to where they were even before we had a crisis. Homeowners rates will come down that far, too. It may take another year or two before the public catches on because the media isn’t telling them.