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Business Observer Friday, Jun. 15, 2012 6 years ago

Capitol Chatter: June 15

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The weekly roundup of what's happening in government and how it affects business.
by: Rod Thomson Staff Writer

Rising pressure on Citizens to increase premiums
Twenty-five Florida lawmakers are calling on Citizens Property Insurance Corp. to thin out the number of Floridians it insures.

A letter to Citizens President and CEO Tom Grady was sent just a few days after the state-backed insurance company was pushed to raise its rates by insurance industry competitors who say the low rates are undermining competition.

Citizens was intended to be the state's insurer of last resort, to provide property insurance to those who could not get it from traditional insurance companies. But because of low premiums — Citizens does not need to make a profit and it has the full backing of the state --┬áCitizens is by far the largest insurer in Florida.

The main problem is that price caps were put in place legislatively on Citizens premiums under Gov. Charlie Crist in a populist appeal to homeowners who are also voters. But that put Citizens below the market and more homeowners flooded onto the insurer's rolls.

Grady said the price caps on premiums distort the market and smother competition. Further, he says the artificially low prices do not reflect the real risks involved in future hurricanes. He has been traveling the state making the case for rate hikes to add competition and protect Floridians.

Citizens has nearly 1.5 million policies and has been seeking ways to lower that number sharply. The most obvious would be to raise rates. The Legislature enacted a 10% rate hike cap in 2009. Removing it now could send rates up an average of 30%, which is a politically dicey move.

It is particularly challenging because Citizens has $6 billion in reserves now and access to borrowed money to pay up to $19 billion in claims. But such borrowing runs the risk of levying assessments on all Florida homeowners to pay back, which is also a political no-win for legislators.

The lawmakers who signed the letter wanting higher rates include: Sens. Don Gaetz, Alan Hays and Garret Richter, and Reps. Jim Boyd, Ben Albritton, Dennis Baxley, Jason Brodeur, Daniel Davis, Brad Drake, Eric Eisnaugle, Matt Gaetz, Bill Hager, Mike Horner, Charles McBurney, Larry Metz, Bryan Nelson, Kathleen Passidomo, Scott Plakon, Elizabeth Porter, Stephen Precourt, Lake Ray, Kelly Stargel, John Tobia, Mike Weinstein and Ritch Workman.

Pension battle ratchets up, shifts courtrooms
Gov. Rick Scott and the Cabinet have filed a brief with the Florida Supreme Court asking that it approve the law that requires public workers to pay 3% toward the state retirement pension.

This comes shortly after top lawmakers and the Florida League of Cities asked for standing to file briefs on the case seeking approval of the law, which was initially passed in 2011.

The request by lawyers representing Scott, Attorney General Pam Bondi and Chief Financial Officer Jeff Atwater is to overturn a Leon County circuit judge's ruling against the law for existing employees. The judge said those already in the Florida Retirement System could not be forced to contribute any of their earnings toward their retirement.

In the brief filed Monday, Scott and the Cabinet argued, “When revenues expand, government agencies can increase retirement benefits for public employees. But in financially challenging times such as these, the Legislature must be able to adjust its future pension commitments.”

In their request to file a brief, the Senate President Mike Haridopolos, House Speaker Dean Cannon and the league wrote: “The matters at issue involving the Florida Retirement System necessarily implicate the Legislature's appropriations and policy-making powers as well as the responsibility to enact a balanced state budget.”

The league said 185 cities that are members are part of the Florida Retirement System, and the court has already granted them standing to file an amicus brief.

The Legislature passed the law requiring the 3% contribution from employees because of ongoing budget cuts and the increasing costs of the pensions. Plus, as was pointed out repeatedly during the debate, a full-ride, guaranteed pension without any financial input from the pensioners is unheard of in the private sectors. Those stark differences became politically charged during the recession.

House subcommittee seeking business input on regulations
The House Rulemaking and Regulation Subcommittee is asking Florida businesses to fill out a survey on burdensome state regulations so it can look at those that should be repealed.

This is the second year of the YourVoice survey by the subcommittee, designed to provide Florida businesses a way to give the state information on regulatory problems. “Identifying excessive or costly barriers to new business will go a long way in helping to create a favorable business climate across Florida,” said Rulemaking and Regulation Subcommittee Chairman Chris Dorworth, R-Lake Mary.

Click here to go to the survey.

Weatherford's Legg backing could be the difference
House Speaker Will Weatherford, R-Wesley Chapel, waded into the crowded and competitive Republican primary for the new Senate District 17 seat in Tampa Bay by endorsing Rep. John Legg, R-New Port Richey.

Weatherford bypassed Sen. Jim Norman, R-Tampa, former House member Rob Wallace and consultant John Korsak to throw his support to Legg. Norman is mired in an ethics violation for allegedly not giving the required timely notice on a $500,000 gift from a businessman to his wife.

Weatherford's high-profile action could tip the primary in Legg's favor.

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