Speaking before the Florida Insurance Council's recent annualmeeting in Key West, CFO Alex Sink said Florida "went in the wrongdirection this year when the Legislature decided to freeze CitizensProperty Insurance Corporation's rates for yet another year solelyout of political purposes."

She said the impact means subsidizing rates in this state by asmuch as 40 and 50 percent, in some cases. Sink called for seriousconversations among legislative leaders and then asked Citizensabout conducting a study to find out how unsound its rates werenine months ago.

In those talks, she urged policymakers to determine what makes afair subsidy. "If we agree it's too big of a subsidy, then let'stalk about a glide path to rate adequacy for the state-run insurerthat has grown into the largest single property insurer in theState of Florida with some 1.3 million policies," she said.

Glide Path to Smooth Landing

Sink added that the glide path would "put people on notice" thattheir premiums would go up five or 10 percent a year for severalyears until rates are deemed actuarially sound. It would providehomeowners with a means to gradually plan family budgets ratherthan hitting them all at once with a single sharp rateincrease.

The glide path was an idea first raised during the 2008 regularlegislative session as a way to move Citizens towards rateadequacy. However, lawmakers scrapped the idea, fearing publiccriticism of any plan that would prompt rates to rise.

Citizens' rates have been stuck at 2006 levels since the January2007 special legislative session. Even then, Citizens' rates weresaid to be inadequate and were set to increase by more than 50percent.

Insurers, as well as the financial experts advising Citizens andthe Florida Catastrophe Fund, predict that the longer rates remainfrozen, the wider the leap it will need to get to rateadequacy.

Sink first sounded the alarm last fall when she questionedwhether the Cat Fund could deliver on its expanded coverageauthorized by the legislature in 2007. She tried unsuccessfully toreduce some of the Cat Fund's liability during the 2008 session,again because, judging by her office estimates, lowering theliability of the upper limits of the Cat Fund by 25 percent (as shesuggested) would have caused a rise in rates of anywhere betweenone-and-a-half percent and three percent.

Legislative leaders were unwilling to consider any measure thatwould produce rate hikes.

Sink indicated that her office will continue pushing to limitthe Cat Fund's liability, referring to the failed 2008 legislationas "our first try."

She said she was encouraged by the large number of newspapereditorials around the state endorsing her idea: "It tells me thatthe media is getting it."

Dudley Takes Over as Chair

In addition to the speech by Sink, the FIC program offered majoraddresses from Alex Soto, Miami independent insurance agent andIIABA immediate past president; and J. Bruce Ferguson, senior vicepresident, state relations department, American Council of LifeInsurance.

Attendees also heard from a panel representing the boards of PIAof Florida and FIC. The two associations are joining forces for aninsurance agent/insurance company partnership to educate consumersand the media as well as rebut misinformation about our industry(see page 14).

New officers and directors are traditionally introduced at theconvention. Bill Dudley was installed as 2008/2009 chair of FIC'sexecutive committee and board. Dudley is AFLAC's state governmentalrelations regional counsel from Columbus, Ga. New officers electedby the board on Sunday include Harry Spring of Humana inTallahassee, who joins the rotation to eventually become FICchair.

Kurt Driscoll, First Professionals Insurance Company ofJacksonville, received the 2008 Wade Holland Distinguished ServiceAward.

The Harry Landrum Award for important service from members ofthe Florida legislature was presented to state Reps. Don Brown(R-DeFuniak Springs), and Dennis Ross (R-Lakeland), and Sen. J.D.Alexander (R-Lake Wales).