Rick Scott calls for property insurance overhaul

Rick Scott called for some politically tough medicine Monday when he unveiled his position on property insurance: Make the state’s government-run company “actuarially sound.”

Translation: Allow rates to rise for the nearly 1.2 million customers of Citizens Property Insurance.

Scott said he also wants to turn Citizens into the insurer of last resort to protect Florida taxpayers and make Florida’s insurance market more attractive to private insurance companies spooked away by government intrusion — which has artificially depressed insurance rates from South Florida to Tampa Bay.

When asked if his proposal would lead to higher insurance rates, the Republican candidate for governor didn’t answer the question directly.

“I believe that in a free market economy, prices will come down,” Scott said.

Scott’s proposal to revamp the insurance market coincided with a call to limit lawsuits against insurance companies, small businesses, car companies and also doctors who perform surgeries under the auspices of the state. Known as “tort reform,” lawsuit limits are the key concern of the Florida Chamber of Commerce, which endorsed Scott last week.

Scott’s Democratic opponent, state Chief Financial Officer Alex Sink, said in a statement that Scott was on the side of “Big Business” instead of the little guy by making it tougher for them to access the courts.

But Sink’s spokeswoman Kyra Jennings said Sink also believes Citizens needs to become more financially sound and should also become the insurer of last resort.

Jennings said Sink believes rates shouldn’t increase by more than 10 percent annually — which the Republican-led Legislature mandated in 2009, two years after legislators froze the insurance company’s rates.

“She doesn’t want people to feel a significant sticker shock,” Jennings said.

Scott’s campaign wouldn’t say where he stood on whether Citizens’ rates should increase by more than the 10 percent as called for in House Bill 1495, “a step in the right direction.”

The campaign pointed out that taxpayers and non-Citizens customers would be at financial risk if a major disaster blew a hole in Citizens’ shaky finances.

But even Scott supporters, including Sen. Mike Fasano, R-New Port Richey, are leery of the call for so much free-market reform.

“The privates aren’t coming back. But rates will go up,” Fasano said. “When premiums go higher, your foreclosures are going to increase as well.”

Fasano said he was told in 2009 that rates would triple for Citizens’ customers if the government-run insurance company were to charge actuarially sound rates — that is, payments sufficient to cover likely maximum losses in a disaster.

Fasano said he agrees with Scott’s call to make sure that those who receive insurance payments for damages from sink holes actually use the money for repairs.

Fasano also likes Scott’s proposal to reduce fraud in a program that gives homeowners incentives to hurricane-proof their homes with building straps and shutters.

Democrats including former Sen. Steve Geller of Cooper City, an architect of the 2007 insurance rate-freeze, said Scott’s plan is just a giveaway to the insurance industry.

“Republicans and the industry say that raising rates will lower rates,” Geller said. “I believe that. I also believe in the tooth fairy.”

But David Letson, a University of Miami professor with the Rosenstiel School of Marine & Atmospheric Science, said Florida needs to do a better job getting rid of Citizens, which is growing as private insurers flee the state.

But Letson said it’s not easy to change the system because rates will rise in the short term.

“It’s very unpopular,” said Letson, a member of the business-funded group Florida TaxWatch. “You don’t want to hear that from your candidate for governor.”