From the Editor

Fresh off the January special session where lawmakers largely acted unilaterally in dictating a new set of rules that homeowners' insurers must follow, the expectation — or at least the hope — is that lawmakers would refrain from instituting further regulatory or legislative changes during the current session. So far, that appears to be the case as lawmakers have narrowed their focus on a hurricane mitigation bill and a so-called “glitch” bill to rectify minor clerical and technical errors in the special session legislation. Although either of these bills could run into a roadblock if some special interest group manages to attach a controversial amendment to the legislation, the conventional wisdom is that lawmakers would rather not pass a bill at all rather than revisit the January reforms. This truce between the industry and the legislature has advantages for both sides. First of all, it allows lawmakers to avoid another lengthy controversial debate over homeowners' insurance. Secondly, it leaves more time to debate other pressing issues, such as the fate of the auto personal injury protection law, which is set to expire this year unless lawmakers take action to renew it or replace it with a different coverage scheme.

Given the tacit agreement between the industry and policymakers to pull their punches on homeowners' insurance this session, one would expect that both sides would breathe easier. However, just when it seemed the industry would make it through the session relatively unscathed, some Senate lawmakers have taken up the cause of upending the regulation of insurance by calling for the Office of Insurance Regulation to be abolished and replaced by a new Division of Insurance Regulation under the chief financial officer. Gone would be the Financial Services Commission's role in regulating insurance, including appointing an insurance commissioner. Instead, all insurance regulation would fall under the elected CFO, who would serve as the insurance commissioner and appoint division heads.

The Senate bill is largely a throwback to the days before Florida voters approved a constitutional amendment limiting the Cabinet to four executive officers including the CFO, the governor, the attorney general, and the commissioner of agriculture. The amendment merged the former offices of state comptroller, who oversaw banking and financing, and the state treasurer, who also served as the insurance commissioner. At the time, the thought was that combining the comptroller/treasurer/insurance commissioner would be far too much responsibility and power for one official.

When the legislature enacted reforms in 1998, the industry watched closely from the sidelines. Privately, many in the industry welcomed the arrival of an appointed commissioner because the industry often felt the heavy hand of politics when it came to public policy and regulatory actions. By making the insurance commissioner answer to four elected officials, it would dilute the political pressure that could be brought to bear on the OIR's actions.

In practice, much of that theory has been borne out. When it's not depending on the campaign contributions from the companies you regulate, the commissioner's job has a greater sense of autonomy. And although some Senate lawmakers argue that by placing the regulation of insurance under an elected CFO would bring greater accountability to consumers, the last election, with its emphasis on property insurance, certainly bore out that fact that consumers were more than willing to hold the FSC accountable. Bottom line: the Senate bill should die because there is no pressing argument in favor of making the change. All it would do is bring more uncertainty to a market that is already tired of standing on shaky ground.