New Year to Start Fast for Insurance and Other Issues
The holiday season always seems to pass too quickly. After an extended period of unwinding and spending time with families and friends, the new year always brings an abrupt end to this relaxed pace as we return to work, children return to school and we pick up where we left off. This will especially be the case in 2012, when January ushers in the Florida legislative session.
This might seem like an unusally early start to those who don’t follow the Florida process closely. That’s because it is early— by about two months. Once each decade, the legislature must deal with reapportionment. In these years, the legislative session starts earlier. This means the 2012 legislative session will start next week instead of its more customary start in March.
We know some insurance issues will receive attention throughout the session. Some of these issues have been the subject of numerous forums, debates and discussions throughout 2011 and leading into 2012. One of the prevalent issues will be whether to reform Personal Injury Protection (PIP) coverage in Florida. There has been a lot of talk about problems in the PIP market, and certainly the abuses in that market are driving up the cost of this mandatory coverage. However, no consensus has developed as to how to fix PIP. Some advocate that PIP should be repealed, while others prefer to leave the system intact, perhaps limiting the types of medical services that are covered. This issue will be debated hotly throughout the upcoming session.
Citizens Property Insurance Corporation also will take its customary position among the prominent features of the property insurance market to be discussed. Governor Rick Scott has stated that he wants to dramatically reduce Citizens’ size, but the recent trend in its policy count shows how difficult that will be. To truly have Citizens function as a residual market, we cannot simply look at how to change Citizens— we must have a market that facilitates the investment of private capital.
On a related note, bills have been filed that would reduce the size of the Florida Hurricane Catastrophe Fund (FHCF). This seems beneficial on its surface because it reduces the state’s exposure to hurricane losses, and the eventually taxes that will be levied on all Floridians in the form of assessments. However, upon closer study, the proposal has the potential to be more harmful to the private market than to Citizens, which will only compound the problems that are currently leading to Citizens’ growth. The Florida property insurance market necessitates delicate balances, and I’m afraid as currently constructed the proposal to shrink the FHCF will continue to tip the balance away from private capital and toward the expansion of Citizens.
Regardless of one’s position on these issues, one thing is clear– the champagne glasses and streamers from New Year’s Eve will barely be put away before this year’s session is off and running.