The Republican-controlled Florida Legislature is almost halfwaythrough its annual session, and the outcome is nearly as uncertainas annual hurricane forecasts.

While there are bills dealing with workers' compensation, theFlorida Hurricane Catastrophe Fund, and property insurance ingeneral, there does not appear to be a universal consensus yet onthe best way to approach any of these incredibly thorny issues.

Adding to the debate is a proposal from Rep. Ellyn Bogdanoff(R-Ft. Lauderdale), calling for a major restructuring of propertyinsurance. Bogdanoff filed HB 1157 to establish the FloridaHurricane Protection Program, which would create a state-run entitythat assumes just the hurricane risk for property insurance in thestate.

Bogdanoff's legislation would shrink the size of the Cat Fund by$3 billion in the coming year and require that Citizens PropertyInsurance Corp. stop writing hurricane coverage in 2010. EventuallyCitizens would be required to transfer part of its surplus to helpthe program out.

Bogdanoff compared the plan to the national flood insuranceprogram and noted carriers would still write coverage for windstormevents that are not hurricanes. She acknowledged that herlegislation is a fundamental reshuffling of property insurance, butsaid something has to be done.

"It's a major concept, it's a huge lift," said Bogdanoff. "Butwhen you look at what could happen this summer if we were to have aClass 3 major hurricane go through the Tampa Bay area, a $75billion loss, we will bankrupt the state of Florida. We will haveto call 1-800 White House to bail us out."

The potential of a huge storm hitting the state has focusedattention on the battered financial state of the Cat Fund. Despitehaving nearly $8 billion in the bank, the Cat Fund would beunlikely to come up with the additional $18 billion it would needto cover claims associated with a major hurricane like Katrina orAndrew.

Financial advisors are scrambling to find potential backup forthe state-created reinsurance fund, but Gov. Charlie Crist andother state leaders are focusing much of their attention on tryingto secure a line of credit from the federal government. Crist hasasked U.S. Treasury Secretary Timothy Geithner to promise to buybonds from Florida that would be paid back with Cat Fundassessments on insurance policies.

Cat Fund Worries

Chief Financial Officer Alex Sink said the federal governmentremains the only place to get such major financing in the wake ofthe ongoing credit crunch. "There is no single silver bullet here,"she said. "There is no private market out there that has a lot ofcash lying around right now. The only place that has liquidity,which means cash, is the federal government."

That does not mean that lawmakers won't be forced to act by theend of session.

"I think we need to be prepared to respond to the challenges ofthe Cat Fund this session if arrangements have not been adequate,"said Sen. Garrett Richter (R-Naples), chairman of the SenateBanking and Insurance Committee. "If we don't have a sounderposition on April 28, we better be prepared to develop one."

Sink has sent her own recommendations on the Cat Fund andinsurance to Richter and Rep. Pat Patterson (R-DeLand), chairman ofthe House Insurance, Business and Financial Affairs Committee. Sheurged state lawmakers to go ahead with "common sense and gradualreforms" but ones that would not subject Floridians to "large,one-time premium shocks."

"If we take these smart, incremental steps, we will reduce ourrisk and make our state better protected and less financiallyexposed when a major storm hits," Sink wrote.

Sink called on lawmakers to spend $20 million in the coming yearon the My Safe Florida Home program that provides grants to hardenhomes against storms. She also wants them to gradually reduce thesize of Cat Fund coverage, give the Cabinet the ability to set CatFund coverage levels in the fall, and "gradually return" Citizensto an "insurer of last resort."

Workers' Compensation Fix

Richter and other Republicans say they are also determined topass a workers' compensation bill this session, but it is not clearthey will succeed.

The House Insurance, Business and Financial Affairs Committeemoved HB 903 out of committee by a 19-2 vote during the second weekof session, although neither the business coalition nor the trialattorneys are pleased with the measure.

The bill, from Rep. Anitere Flores (R-Miami), is meant tooverturn an October Florida Supreme Court ruling in the Murray v.Mariner Health case. In its decision, the Court sided with Murray'sworkers' compensation claimant attorney, ruling that he wasentitled to $16,000 in fees instead of a dramatically lower amountbased on calculations set forth in the 2003 reform legislation.Insurance Commissioner Kevin McCarty signed off on a 6.4 percentworkers' compensation rate hike in the wake of the ruling. However,if the fix passes, the rate hike likely will be reconsidered.

The House bill strikes a provision in the workers' compensationstatute that maintains attorneys' fees must be "reasonable," a termthe Court cited in its ruling. The bill also keeps intact statutorycaps the Legislature placed on plaintiff attorneys' fees: 20percent of the first $5,000 in benefits secured; 15 percent of thenext $5,000 in benefits; 10 percent remaining amount of thebenefits secured to be provided during the first 10 years after thedate the claim is filed; and 5 percent of the benefits securedafter 10 years.

Flores told committee members that the legislation is stillbeing worked on by the affected parties — insurance carriers,workers' compensation attorneys and business group lobbyists — andthat the disparate groups are meeting in hopes of reaching anaccord.

"We are working toward a compromise," Flores said. "We areclose; we are not there yet."

Both Richter and Flores say passage of the legislation iscrucial in order to preserve jobs during the state's severeeconomic downturn.

"When it comes down to it, this bill is about jobs," Floressaid. "If workers' comp rates go up — and they will — employerswill have less money to hire employees. They will have to letworkers go. We have heard that from employers; we have seen it. Weknow that it is a fact."

But Flores' bill is already drawing fire. Workers' compensationattorney Rosemary Eure said the fee caps and other proceduralchanges made in 2003 have had a "tremendous impact" on herSarasota-based firm. With the fee caps, Eure reported that she hashad to turn injured workers away, which she said means they are notreceiving the care they need to return to work.

"Insurance companies and the self-insured [funds] are wrongfullydenying benefits to the workers of this state, and that needs tostop," said Eure. "And we need you to assist with that."

Richter has a Senate companion bill similar to the measuresponsored by Flores. But while his bill is guaranteed passage outof his own committee, it is not clear how the measure will fare inthe full Senate.