In less than a week, the Senate Banking and Insurance committee will vote on SB 408. If the session doesn’t start until March, what type of “vote” is taking place? Although the 2011 Session of the Florida Legislature does not begin until March 8, 2011, various committees of the House and Senate meet throughout the year. For a bill to become law, it must be voted on by the full legislature (usually during Session). However, before the full legislature can vote on a bill, if must be “heard in committee.” Thus, a bill must be heard by multiple committees in both the Senate and House. Then, the full Senate and House will vote on a bill before it can go to the governor for signature.

I offer this background information because it puts the disconnect between Tallahassee and the rest of the state in context, especially with respect to insurance issues. Tallahassee is a bubble that magnifies the political consequences of policy choices while minimizing the impact these choices will have on the consumer. Take the debate surrounding the potential deregulation of Florida’s insurance market. If you operated in “Tallahassee world,” you would think that this was the silver bullet that would fix all of the insurance ills that plague the Florida property market. Democrats and Republicans fell over themselves in a rush to vote for this bill last session. In the Florida House of Representatives, 105 voted yea, 13 voted nay; in the Florida Senate, 27 voted yea, 9 voted nay. To this day, I am amazed that only 22 members of the Florida legislature voted against deregulating Florida’s insurance market. I am even more amazed that this legislation is GOING to pass this year because Gov. Scott would probably sign such a bill (unlike Gov. Crist who vetoed the bill).

As this bill was debated, you could not find many people in Tallahassee, other than consumer groups, who opposed this bill. The people who opposed the bill did so at their own peril. Insurance Commissioner Kevin McCarty opposed the bill and, as a result, earned the ire of several State Senators who wondered if it was “time for a change at OIR.” When I testified against this bill in the Senate and House, the members questioned my motives about testifying against a bill that “allowed consumers to choose.” However, throughout the state, most editorial boards and newspapers took positions against this bill. They were able to see that this bill would lead directly to higher rates and that the “market” would not increase competitions and attract capital to Florida. My office received lots of communication from consumers who understood the dangerous ramifications of this bill.

Given the statewide apprehension about this bill and the documented failures of deregulation in similar circumstances, why did only 22 members of the legislature vote against the bill? It is because the industry is able to frame the insurance discussion in Tallahassee. That discussion revolves about “getting more companies to come to Florida” and “decreasing the cost drivers in the system.”

  • “Getting more companies to come to Florida” = deregulate the market so that companies can charge whatever rate the market will bear.
  • “Decreasing the cost drivers in the system” = losing resources that protect consumers from unscrupulous insurers: making it harder to file a claim, imposing time limitations on claims, and decreasing the role of plaintiff attorneys in the claims process (i.e., SB 408).

When the issue is framed in this way, it distorts the true nature of the problems in Florida.

I believe that consumers understand the need to improve the insurance climate here in Florida; I also believe that the bad actors in the process should be punished. It is possible to approach the insurance issues in our state in a way that could benefit the industry and public at the same time. However, this legislature does not want to approach the problem in a balanced manner. Their industry-driven approach to the insurance problem is to deregulate rates and then make it harder to file a claim. If they pass those changes, I can bet that when the next natural disaster strikes and people are unpleasantly surprised at the changes imposed by SB 408, the legislature will be back in Tallahassee addressing these same issues. Moreover, when rates skyrocket because of deregulation and the “market” does not lead to increased competition and lower rates, the Tallahassee disconnect will come back to bite those who voted for deregulation.

The only way to stop the “Tallahassee disconnect” is to get involved in the process and let our elected officials know that we will not tolerate one-sided legislation that helps the industry — at the direct expense of the consumer.