SHARE:
Lining Up To Revise The Constitution
Because the panel has free reign to address any issue relevant to state government, the lineup of CRC wannabes is getting long. "Everybody wants to be on it," exclaims Dexter Douglass, the governor's legal counsel and point man on the issue. "This is history-making."
Schools and the question of how the state funds its constitutional guarantee of a public education are expected to be hot topics. Clark Maxwell, executive director of the Florida community college system, and University Regent Steve Uhlfelder have made known they want on.
The state's privacy provision was the centerpiece of the Florida Supreme Court decision upholding a minor's right to an abortion, and that will be a topic of discussion. Ivan Ortiz, vice president of United Tile Corp. in Miami, has applied; among his interests: He is a member of the Archdiocese Respect Life Committee. The state tax structure will be ripe for discussion, as will the judiciary and issues of merit retention. The state tax collector's association has put up their applicant, Barbara Ford-Coates, Sarasota County tax collector; and former CRC member and Third District Court of Appeals Judge Thomas Barkdell is expected to be named by Chiles.
How the state regulates utilities, banks and insurance and whether it reforms the state Cabinet system are expected topics. Comptroller Robert Milligan has said he wants a voice on the panel, as has Henry Vincent of TECO Energy, whose interest is utility regulation.
"Literally anything and everything could come up with these things," notes Tallahassee lobbyist Jim Krog. "The only limit comes from the members." To learn more, see the web site at: http://www.law.fsu.edu/crc.
--
INSURANCE
Waiting On The Big One
FHurricane season is here again, and Florida faces the perennial question of who will cover the insurance costs if the Big One hits.
After Hurricane Andrew cut a swath across south Florida in 1992, sending 11 insurers into bankruptcy and others fleeing the state, Florida's Residential Property and Casualty Joint Underwriting Association (JUA) swept up the coverage of as many as 936,000 homes. As a result, JUA faces a possible $4.8 billion exposure with reserves to cover only a fraction.
If that equation isn't frightening enough, the results of the two-year campaign to "depopulate" the JUA are equally disturbing. The jargon, worthy of a disaster film, refers to an attempt by Insurance Commissioner Bill Nelson and the JUA to shrink Florida's insurance pool. In the last six months, 15 carriers have agreed to take more than 605,000 JUA policies.
The transfer has reduced the JUA's liability in less densely populated coastal counties and inland areas by as much as 66%, but it has done nothing to reduce the $4.8 billion maximum potential hurricane loss in south Florida. In Dade, Broward and Palm Beach counties, the JUA continues writing new policies - many for new construction - faster than it can get rid of them. And these policies consume nearly three-quarters of the JUA's total liability.
Part of the problem is that the JUA allows new carriers to cherry-pick their business. Predictably, most companies have loaded up on low-risk inland properties to offset the liability of the few they take from hurricane-prone south Florida.
Only one company qualified for the cash incentive tied to the percentage of policies it takes out of Dade, Broward, Palm Beach and other coastal counties.
The message is clear, say industry officials. "In coastal south Florida, particularly Dade County, the market is saying insurers regard it as uninsurable," says Vince Rio, lawyer for State Farm Insurance, the state's largest property insurance carrier. "In order to solve the problem, we have to recognize that fact."
Almost everyone agrees the solution for truly uninsurable policies is creation of a permanent state-run JUA. But at its current mammoth size, it can't accumulate enough reserves to cover losses in a major disaster. If it is forced to impose assessments on the private market to pay claims on a major hurricane, as the law allows, the hefty charges could prompt another round of industry bankruptcies and threaten Florida's financial stability.
Meanwhile, legislators and regulators continue to tinker with ideas to reduce the JUA and make Florida more appealing to the private market. "I don't know what the answer is other than to continue to create a marketplace that companies feel comfortable to be in," says Rep. Sandy Safley, R-Clearwater, the chairman of the House Financial Services Committee.
Legislators are expected to allow insurers to offer larger deductibles to reduce their risk this session and provide new incentives to homeowners to strengthen their homes against wind damage. In case a major hurricane does hit this year, the JUA is attempting to shore up its finances. It doubled its line of credit to $3 billion and increased the borrowing power of the state's reinsurance pool, the Florida Hurricane Catastrophe Fund (CAT Fund). If a hurricane hits this season, the CAT Fund could cover residential insurance claims of more than $7 billion - that is 70% of the total residential losses from Andrew - up from $6.4 billion in 1996.
But, officials concede, many of these improvements will be of marginal help if the Big One hits. "An Andrew-type hurricane hitting Fort Lauderdale instead of Homestead would be a $50 billion national disaster, and we'd have to call on national resources," admits Nelson. "No one state can withstand that kind of disruption." In other words, Florida once again is hoping to buy time from Mother Nature.
