Leave workers' comp alone. Lower the state hurricane catastrophe fund's buydown. Allot more money for mitigation on top of the $250 million from last year. Eliminate the Panhandle exemption to the tougher statewide building code. Protect CAT fund balances from being raided by the Legislature for other needs.

Ready to Boom

For the insurance industry, the general public and politicians, any discussion of the year ahead begins and ends with hurricane insurance. The certain outlook for the industry is that the state will examine controlling property insurance costs by taking an expanded role in assuming risk against hurricanes. The extent of that role -- and how to pay for it -- will depend on legislative sausage-making either in this month's special session or the regular session.

After $36 billion in insured damage in Florida for the eight-hurricane 2004 and 2005 seasons, property insurance is in crisis. The number of property insurers writing in the state fell to 167 last year, down from a high of 225 in 1998. Last year, 52 of those 167 asked for premium increases of more than 25%, in part to cover their own higher costs for reinsurance.

The state's putative insurer of last resort, Citizens Property Insurance, has become the largest insurer in the state with 1.2 million policies.

"The people of Florida are pretty upset about the situation they're in," says Tallahassee-based William Stander of the Property Casualty Insurers Association of America. "We don't have a magic plan. There's no carburetor that's going to let you get 100 miles to the gallon that we're keeping in the vault some place."

Changes Ahead

Reinsurance
The state is expected to make it easier for insurers to tap its catastrophic fund.

Mitigation
The state will likely OK more than the $250 million appropriated last year to inspect homes and help harden them to withstand hurricanes.

A major blow: Floridians are hoping lawmakers meeting in a special session this month can come up with solutions that will lower escalating property insurance rates.

Gov. Charlie Crist proposes two populist measures: Forcing companies doing business in Florida that write residential property coverage in other states to offer homeowners coverage here too. He also wants to prohibit the Florida standalone subsidiaries that insurers set up after 1992's Hurricane Andrew to protect them from losses in Florida and from having to share profits with Florida units.

The Florida Property and Casualty Insurance Reform Committee, headed by former Lt. Gov. Toni Jennings, last year endorsed neither measure. But her group has proposed a lengthy list of changes, including adjusting the state's catastrophe fund to lower the cost of reinsurance -- insurers' insurance.

The reinsurance industry says demand was up 120% in 2006, while the capacity available was only 80% of 2005's figure, according to the committee report. Democrats have proposed having the state essentially take over at least some hurricane risk and leave the private sector to traditional property insurance against fire and theft. An industry group of independent insurance agents and real estate professionals has said it's "not inappropriate" to research having the state take over hurricane coverage from the private sector and has asked for a formal study.

Says Stander: "Probaly what we can all do is pause and take a deep breath. We run the risk of exacerbating the problem."

No More No-Fault?

In 1971, Florida became the second state to pass a no-fault auto coverage law and require motorists to have personal injury protection (PIP) coverage. Now the law requiring motorists to carry no-fault coverage is scheduled to expire

Oct. 1. The insurance industry, medical providers and lawyers last year couldn't agree on changes, so legislators voted to extend the deadline for two years. Outgoing Gov. Jeb Bush, intent on forcing a resolution this year, vetoed the extension. Now, the Property Casualty Insurers Association of America advocates letting no-fault die and joining the 38 states without it. "PIP essentially has been the pot of gold at the end of the rainbow" for the legal and medical professions, says the association's William Stander. Insurers complain of "hard" fraud -- injury claims from fictitious wrecks -- and "soft" fraud such as claims for nebulous injuries from real wrecks.

Letting no-fault die would be a financial disaster for hospitals, counters Ralph Glatfelter, a lobbyist and senior vice president of the Florida Hospital Association. Health insurers would have to bear the costs for insured people, while healthcare providers would have to suck up -- and pass on the costs to other customers -- the cost for the uninsured, he says. He estimates the shift for hospital care alone would total $300 million, absorbed equally by insurers and hospitals. "It will drive up the costs for hospitals and drive up the cost of health insurance," he says.

"The Legislature cannot allow no-fault to be repealed and not submit something in its place."

That something could include mandatory bodily injury coverage of $25,000 per person and $50,000 per accident or mandatory medical coverage, limited to ER and hospital care, for $20,000 to $25,000.

Sam Miller, of the Florida Insurance Council, whose group has no formal position on letting no-fault expire, predicts a compromise.

Person to Watch

Alex Soto
President, InSource Miami

Cuba native Soto, 57, is president of independent insurance agency InSource and the first Hispanic president of the Washington-based Independent Insurance Agents and Brokers of America.

Soto and his InSource partners want to increase business by 15% this year. At IIABA, Soto is focusing on stabilizing the Florida insurance market through advocating for congressional action. Soto is on Hispanic magazine's list of the 100 most influential Hispanics in the nation.

Workers' Comp

One unqualified success for the insurance industry in recent years has been the changes made to workers' comp in Florida in 2003. Rates are now 40% lower than before the changes.

In 2000, Florida often was said to have the highest rates in the nation, and one year ago, the state was ranked sixth. But the change in the law has led to four rate cuts, including a 15.7% reduction in 2006. Now the state ranks 17th, says Lori Lovgren, state relations executive for Boca Raton-based National Council on Compensation Insurance, which studies workers' comp trends and recommends rates.

The 2003 change capped attorney fees for workers and tightened standards for compensation, especially for the most expensive injury, permanent total disability.

Miami workers attorney Mark Zientz says rates have indeed come down, but only because benefits to injured workers have been cut. Zientz wants the state Supreme Court to take up a workers lawyers' suit to challenge the 2003 law. Workers, he says, got the "sticky end of the lollipop."

International Interest

International Insurers
Foreign-based insurers are showing a growing interest in basing operations in Florida, says Bowman Brown, partner at Shutts & Bowen in Miami.

Since the Legislature in 2005 enacted a landmark law, the first of its kind nationally, to allow offshore insurers to sell annuity and life insurance from Florida to non-U.S. residents, three companies have received state approval to set up shop here, and a fourth has an application pending.