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Insurance & Banking

One terrifying summer morning in 1992, the cost of insuring a home in Florida changed forever. Hurricane Andrew's legacy has been higher rates and fewer insurance companies: In south Florida, a quarter-million homeowners in Miami-Dade, Broward and Palm Beach counties still can't buy insurance anywhere except from the Joint Underwriting Association (JUA), the state-run insurer of last resort created after Andrew. Despite rates that have tripled since 1992 and state incentives for insurance companies, many still won't write new policies in south Florida. It may take "several more years" to change, says Florida Insurance Council spokesman Sam Miller.

Insurance Commissioner Bill Nelson is expected to announce a new bonus plan, possibly including tax credits, to attract insurers. But that's not the only issue facing the industry and the newly re-elected commissioner. For example, Nelson wants insurers to give premium discounts for home improvements such as well-built roofs and shatter-resistant windows. "We need insurance companies to give incentives if homes are hurricane-resistant," he says. He also wants exclusive rate-setting power for all lines of insurance and the elimination of an arbitration panel with industry representatives.

Issues ahead for other kinds of insurance:

Healthcare: Nelson says he'll propose an HMO patients' "bill of rights" to improve access to specialists and courts. Insurers say Florida's consumer rights are sufficient.

Workers' compensation: Nelson recently rejected the industry's request for a 13.1% hike in 1999 workers' comp rates, though he might approve a small increase. Robert Sprague, Liberty Mutual Group's manager of business underwriting in Tampa, says: "It's important to stop the erosion in rates so we can invest in good care for injured workers."

Automobile insurance: Some legislators think motorists should have to carry bodily-injury liability along with personal-injury protection. Nelson and the industry say no. "It would jack up the cost of insurance," Nelson says, possibly enlarging the dangerous pool of uninsured motorists on Florida's roads.

The Bank Beat

Update: International

Banks with trade or private-banking business overseas may be in for a wild ride. "Stay on your toes," says Diane de Vries Ashley, a senior vice president at Bank Boston International in Miami and president of the Florida International Bankers Association. This month, the euro replaces 11 European currencies in electronic transactions. Also, by year's end, all banks must be 2000-compliant, so their systems -- and customers' accounts -- won't be disrupted come Jan. 1. "Most of our clients in international land -- businesses and banks in other countries -- probably will not be ready (for the year 2000)," she says. Meanwhile, bankers must watch for problems arising from economic turmoil in Asia and Latin America, such as borrowers' weakened creditworthiness. But Florida's private bankers may also profit from Latin flight capital. "It could be quite a year," says Ashley.

Regulators on Alert

Recent dour economic forecasts have Florida's regulators looking closely at banks' loan quality; they remember the late '80s and early '90s when bad loans sank many banks. "We've got to be mindful there can be changes in financial institutions" when the economy sours, says Doug Johnson, assistant director of the Florida Banking Division. Examiners will look for good management controls -- and early warnings of loan portfolio weakness. The vast majority of institutions are on firm footing and will notice no difference in regulators' approach, but, Johnson says, "We need to be careful."

Political Agenda

Banks, whose bid to sell insurance and securities died in Congress last year, aren't giving up; the Florida Bankers Association again will push "financial modernization." There's no choice, says association CEO Alex Sanchez: "The banking industry continues to lose market share." Nonetheless, the state's industry is booming; Sanchez cites the NationsBank-Barnett merger and the dizzying pace of new bank charters in 1998 -- 32 applications through Dec. 1. "These are exciting times," he says.