The fate of Florida's fragile property insurance market maydepend heavily on what happens in the next round of elections inthe Sunshine State.

This year the state will have the most wide open election in itshistory, with voters choosing not only a new governor but anentirely new Cabinet. The winners will control the regulation ofproperty insurance in Florida and be responsible for decidingwhether to keep or to replace current Insurance Commissioner KevinMcCarty.

Just as importantly, the next governor will have to decidewhether or not to keep the policies that were put in place underGov. Charlie Crist. Throughout his term, Crist has been openlycombative with the insurance industry. For the past two years hehas vetoed measures that insurers said would have helped themremain viable and may have attracted new business to the state.

Senate President Jeff Atwater (R-North Palm Beach), and himselfthe GOP candidate for chief financial officer, said during a recentRepublican Party of Florida gathering that those seeking higheroffice cannot avoid the problems with the state's propertyinsurance market. He said the property insurance market remains athreat to the state's economy because a major storm could wind upcosting taxpayers if the state-created insurer or state-createdreinsurance fund were forced to impose surcharges to pay fordamages.

"It is still the silent threat to Florida's fiscal future and wehave to continue to find a way to offload risk from the Floridataxpayer who doesn't yet realize how significant it could be if acatastrophic event occurs in some of our most populous areas,"Atwater said.

A Different Tone

Property insurance has not received much attention on thecampaign trail yet, with most of the candidates focused on the oilspill disaster in the Gulf of Mexico or hot-button issues likeimmigration. So while those running for governor have avoidedmaking any confrontational statements about property insurance,just as importantly they have avoided making any firm commitmentsas to what exactly they would do if elected.

Attorney General Bill McCollum — one of two main GOP contendersfor governor — says in the "long run" the state should not havecompanies such as Citizens Property Insurance Corp., which remainsthe state's largest property insurance carrier. However, he saysthat the "reality" is that the state-created carrier will need toremain in place to offer insurance to those who cannot find itelsewhere.

McCollum vows that he will work with both the public and theinsurance industry to bolster the market. "We need to bring otherinsurers back into the state, and when I am governor we are goingto have a different tone than what we have now," McCollum toldreporters and editors at an annual press gathering last month inSarasota. "It doesn't mean that they [insurers] are going to get tohave their way on everything. We've got to have regulation in ourstate."

McCollum also contends that he will aggressively push Florida'sdelegation to get a national catastrophic insurance plan thatincludes a federally backed plan to cover hurricanes. During thelast several years Florida's congressional delegation has pusheddifferent variations of such a plan but has met stiff resistancefrom senators and members of Congress from non-coastal states.

McCollum has refused to say what he would have done withprevious insurance proposals, including the 2009 measure that wouldhave allowed well-capitalized carriers to avoid most rateregulation. The bill was vetoed by Crist.

McCollum said he has been "careful" to avoid making anystatements about how he would have handled past proposals because"I want an open playing field when I'm governor to deal with this.I'm going to deal with it; we cannot duck around it any longer," hesaid.

Rick Scott, a health care executive who has used millions of hisown money to make the Aug. 24 primary competitive, said in a phoneinterview that he believes that work needs to be done to attractmore private insurers into the state. He said he does not wantstate regulation to be a barrier to getting more private capital inthe market, but stopped short of endorsing previous legislativeproposals and said that there is a need for some regulation ofproperty insurance.

Bud Chiles, the independent candidate for governor who jumpedinto the race at the last minute, also said he would like to see adecrease in the number of policies in Citizens, but he would notsupport giving insurers more leeway over their rates.

"I would be very vigilant making sure that consumers get a lotmore protection than they are getting now," Chiles said last monthin Sarasota.

Sink Calls for Change

Chief Financial Officer Alex Sink, the main Democratic contenderfor governor, has spoken out in the past about the need for changesto insurance regulation. She pushed for scaling back the size ofFlorida's reinsurance fund — the Florida Hurricane Catastrophe Fund— and this year she supported reducing the time that people couldfile for claims following a hurricane.

"It is critical that we stabilize our property insurance marketin this state," Sink said at the same Sarasota meeting thatMcCollum attended.

However, Sink does not think insurers should be able to decidetheir own rates. "We should not have deregulation in the insurancemarket," she said. "The role of the insurance commissioner iscritical and important. Companies who believe that they need tohave a different rate structure ought to be able to come and maketheir case in front of the insurance regulator."

Still, Sink said that if she is elected she will be "veryaggressive" in bringing more private insurers back to the state.She noted it will be a "multiyear process" to change Florida'smarket and to turn Citizens back into an insurer of lastresort.

"I believe we can attract companies to come and put theirprivate capital at risk so that we, the Florida taxpayers, don'tbear almost the entire burden in the event of a catastrophichurricane," Sink said.

Insurance Commissioner's Fate Uncertain

There is one thing that could occur if Sink is elected governor.It would probably set the stage for the departure of currentInsurance Commissioner Kevin McCarty. Both Crist and McCollum havegenerally been supportive of McCarty, even as his performance hascome under fire by legislators.

Sink, however, has routinely criticized how he has handled hisjob and has demanded that McCarty appear before the governor andCabinet to answer questions about how his office is dealing withthe state's fragile property insurance market.

The job of insurance commissioner used to be an electedposition. After voters approved a reorganization of the Cabinet in2002 the job was placed under the governor and Cabinet.

However, there was a twist in that law: It takes three votes —including yes votes from both the governor and the chief financialofficer — to either hire or fire the insurance commissioner.

McCarty was first hired by then-Gov. Jeb Bush. Since Sink andCrist have come into office there has been never a public vote toreaffirm his hiring. Sink additionally has backed legislation thatwould have subjected McCarty to a public vote on an annualbasis.