Florida lawmakers sauntered into the 2011 sessionpromising to help businesses, end red tape and regulation, andrevive the state's economy.

The Republican-controlled Florida Legislature championed theidea of free markets at nearly every turn in the first few weeks ofthe 60-day session. However, so far it is clear that the insuranceindustry may not get everything it wants, even from a decidedlypro-business legislature.

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A comprehensive property insurance bill intended to address costdrivers that affect the bottom line of insurers is moving—but notwithout much debate, controversy and changes pushed by those whosay the measure is unfriendly to consumers.

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Other insurance measures also may have a rough time getting tothe desk of Gov. Rick Scott. These include legislation affectingCitizens Property Insurance Corp., bad faith laws, and an ambitiousproposal to allow insurers to raise rates up to 30 percent a yearwithout approval from state regulators. Shifting Political Sands
This is not what the insurance industry expected.

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"Over the last year the industry has benefited from hearing fromthe governor and legislative leaders who came through ourconferences telling us that there was a new day in the Capitol,"said William Stander, assistant vice president and Florida regionalmanager for the Property Casualty Insurers Association ofAmerica.

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"A more free-market pro-business legislature was going to bedeciding the issues. And we were counting on that and pushinglegislation that responds to that charge from them….But now we'vegot a challenge on our hands. It's not going to be given to us.We've got to fight for it," Stander said.

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Many in the industry thought that the departure of Gov. CharlieCrist—who steadily bashed insurers during his four years in officeand vetoed property insurance bills—would lead to legislativechanges.

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Scott, who says his number one goal is to revive the state'seconomy, has called the need to reform Citizens the most pressingpriority when it comes to property insurance. However, the governorhas stopped short of endorsing any bills or coming forward with hisown proposals. He also says he is generally supportive of changinghow insurers deal with sinkholes.

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New Chief Financial Officer Jeff Atwater—while steering clear oftaking any firm sides—has cautioned that legislators should not gotoo far in giving insurers the ability to raise rates withoutapproval from state regulators. Atwater has maintained that theremust be a balance between what is good for insurers and what isgood for consumers. Meanwhile, there are groupsout there who have stepped in to fight the insurancelegislation—primarily the group that represents trial lawyers. Ithas been lobbying heavily to stop or at a minimum seriously altersome of the legislative proposals.

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Sean Shaw, the insurance consumer advocate under CFO Alex Sink,has blasted many of the proposals under consideration. He agreesthat the insurance market is still fragile, but he says thereshould be a more measured response.

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"Can we approach this in a moderate approach and fix what'swrong rather than give everything away to the industry in just onesession?" Shaw asked.

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Shaw is now with the Merlin Law Group, whose tagline is, "ThePolicyholder's Advocate."

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Cost Drivers Being Discussed; SB 408 BattleContinues
The property insurance bill that has generated the most attentionso far is a revival of a comprehensive property insurance measurethat Crist vetoed last year.

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Sen. Garrett Richter, R-Naples, and the sponsor of this year'sSB 408, has touted his legislation as a way to help the state'sfragile property insurance market by cutting some of the costs thataffect the ability of insurers to do business in Florida.

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The bill would put a three-year limit on when hurricane-relatedclaims can be filed and it would lift a mandate that insurers offersinkhole coverage, an area where claims have exploded in the lastseveral years.

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Richter's bill also attempts to change state law regarding howmuch an insurer has to pay out for damages to a home and personalcontents. However, that has proven to be one of the morecontroversial elements of the legislation and it may not beincluded in the final version of the bill. Homeowners can purchase a policy that covers onlythe depreciated cash value of their home and possessions or theycan pay for a policy that will require the insurance company to payto replace everything regardless of how much it would cost.Richter's bill would change how insurers pay policyholders withthese replacement-cost policies.

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His initial legislation called for paying the depreciated cashvalue; the homeowner would get the rest of what was owed uponcompletion of the repairs. Florida had a similar process in placeuntil 2005 when legislators mandated the change amid an outcryfollowing a series of hurricanes that hit the state.

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Richter defends the change in law as a good public policy thatensures that homeowners actually repair their homes instead ofusing their insurance money for something else.

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"If you didn't want to fix your house, you want to buy a boat orgo on a vacation, you may think that's good, but I'm not sure yourneighbor does,'' Richter said.

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The bill has drawn fire from ardent critics of the insuranceindustry such as Sen. Mike Fasano, R-New Port Richey. Fasanoinsisted that it is unfair to force homeowners dealing with a fireor hurricane to dip into their pockets first in order to completerepairs.

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Fasano has made similar criticisms of a proposal in Richter'sbill that would limit the initial payout for loss of personalcontents. Rate Hikes, Citizens, and SB1330 Are in the Mix
Richter's bill, however, is far from being the most substantialinsurance bill under consideration this year. Floridalawmakers also have resurrected a bid to let insurers raise theirrates without much interference from state regulators. This year'sversion of the "deregulation" bill would let insurers raise theirstatewide average rates by 15 percent and individual policyholderrates by as much as 30 percent a year.

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Sen. Alan Hays, R-Umatilla, and the sponsor of SB 1330, contendsthat the legislation is about giving consumers the choice to decideif they want to pay more in premiums in order to keep theircoverage with the same company.

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"I think it's an insult to the consumers of this state for us totry to tell them they are not smart enough to make a choice to buya policy that would be allowed under this bill,'' Hays said.

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Some legislators have agreed with Hays' arguments, saying thatthe wave of previous changes the last few years have done little torestore the state's insurance market.

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"What we are doing is not working; we continue to do the samething over and over again," said Sen. Ellyn Bogdanoff, R-FortLauderdale.

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Crist vetoed a deregulation bill back in 2009, saying it wouldharm consumers. That bill limited the types of companies that couldraise their rates without approval from regulators to companiesthat were well capitalized. This year's bill does not include thatprovision. However, the legislation says any company that choosesto seek rates under this new "alternative" method would have tohave enough surplus or reinsurance on hand by 2015 to cover claimscaused by a truly devastating hurricane.

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Hays also is the sponsor of a bill that would allow Citizens toraise its rates as much as 25 percent a year. Hesaid the measure will force the state-created carrier to shrink insize. Citizens has 1.29 million policyholders across the state,including most homeowners who live along the state's vulnerablecoastlines. Lawmakers four years ago made changes toCitizens to make it more competitive with private insurers thatwere either raising rates or pulling out of the state completely inthe wake of eight hurricanes in two years. Initially, lawmakersfroze rates for Citizens, but then gave the carrier the ability toraise rates up to 10 percent a year for policyholders.

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"Ultimately what I'm trying to accomplish is to get the state ofFlorida out of the insurance business and return Citizens to beingthe insurer of last resort,'' Hays said.

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Hays said that removing the current 10 percent cap would"accelerate the timeline in which Citizens would become healthy."His bill would also make homeowners ineligible for Citizenscoverage if they can get a policy from a private carrier thatcharges up to 25 percent more than Citizens.