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Date of Issue: February 15, 2007

Galvano on insurance: 'I don't want to overstate'

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State Rep. Bill Galvano sees benefits in the new insurance legislation but canít say yet what the impact will be on individual policyholders. Islander Photos: Molly McCartney
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More than 50 people attended a town hall-style meeting Saturday at the Cafe on the Beach in Holmes Beach at Manatee Public Beach to hear state Rep. Bill Galvano discuss the new insurance law and respond to questions.

It was a gallant effort.

State Rep. Bill Galvano, who represents the 68th District, including Anna Maria Island and western Manatee County, devoted more than an hour on Saturday morning to talk about the benefits of the state's new insurance legislation and field questions from a crowd of more than 50 people at the Cafe on the Beach at Manatee Public Beach in Holmes Beach.

Galvano was able to provide at least some answers at the town hall-style meeting co-sponsored by The Islander and the Anna Maria Island Kiwanis Club.

But it's simply too early to know what the impact is going to be for many individuals, he said.

Consider the question posed by homeowner Mary Manion of Anna Maria City, who said her U.S.F.&G. policy now has an annual premium of $3,700. That's triple the $1,200 she paid before.

"Will I get any relief?" she asked.

"You should expect relief," Galvano said, because the state is making more low-priced reinsurance available to insurers and requiring them to pass their savings onto policyholders.

"But I can't say it will go back 200 percent," he added.

 Galvano said it will take time for the state to get its massive new insurance program in place and begin assessing the actual savings that policyholders receive. It will also take time for policyholders to see savings, based on the policy renewal date.

Galvano described the insurance crisis as "an issue that has swept the state and that continues to require our attention."

He said the special legislative session in January was able to lay the groundwork necessary to make insurance more available and more affordable, including rate reductions of up to 20 percent.

"But I don't want to overstate this," he said. More information should be available in mid-March, when the state Office of Insurance Regulation (OIR) reviews insurer rates and makes new estimates on potential savings for policyholders as a result of the new legislation.

Galvano also tried to clarify the confusion that has developed over the temporary rate freeze imposed Jan. 30 by the Florida Cabinet at the urging of Gov. Charlie Crist. The freeze was designed to keep insurance companies from canceling or dropping policies — non-renewals — before the new state legislation can be implemented.

Melodie Moss of northwest Bradenton said she received a notice in December from Liberty Mutual saying her insurance would not be renewed when the policy period ends on March 31.

"We found different reports in the papers," she said. "One said no policies would be canceled; the other said something else. I don't know where I stand."

Galvano assured her that the freeze protects her and other policyholders against cancellation or non-renewal.

"Jan. 30 is the key date," he said. "No policy can be canceled or non-renewed on or after that date, regardless of when you got the notice."

Moss said she was still concerned about the terms of the renewal she would get March 31 when her existing coverage runs out.

"Am I renewed for the year or just a few months?" she wanted to know.

Galvano didn't try to answer that question. Instead, he said, the implementation of the new insurance law "will change the entire environment of insurance so your insurer will have more incentive to stay in Florida and change the rates."

But there is nothing in the freeze or the new law that can force an insurer to operate in Florida, he said.

In his opening remarks, Galvano said he saw a fundamental shift in legislative thinking about insurance when lawmakers convened for the mid-January special session on insurance.

"We believe in the free-market system," he said.

"But there are times in life, going back to the days of Roosevelt, when government has to step in and roll up its sleeves and influence the environment so citizens are not squeezed out."


'Arbitrary' wind zone boundaries are gone

On Anna Maria Island, there was the additional issue of the "arbitrary and capricious" boundaries for the state-designated wind zone, he said.

"Not only were we facing higher insurance rates," he said, "we were being deprived, unconstitutionally in my opinion, of what the state was offering to other citizens in the state of Florida, and that was the availability of state coverage in certain areas."

The result was that commercial properties within 1,000 feet of the Gulf shore were eligible for coverage from Citizens Property Insurance Corp., the state's insurer. Commercial properties — including churches and government buildings — outside the wind zone did not qualify for Citizens.

Galvano said that the public outcry from Anna Maria Island over the wind zone's inequity was a factor in the legislative decision to eliminate the wind-zone boundaries.

"I am so proud of this community, because you played a huge role in what has occurred," he said.

Citizens is authorized under the new law to provide coverage to any residential or commercial property owner, regardless of location, who is unable to find private coverage or who is quoted a premium price that is 25 percent higher than Citizens.


Cat Fund reconfigured

Galvano said that one of the most important legislative actions was to reshape the Florida Hurricane Catastrophe Fund, known as the Cat Fund, to "create a savings for insurers that they could send back to the citizens of Florida and lower their rates."

He described the Cat Fund as a "rainy-day fund" to cover damage in case of disaster.

"We recognize that if there is a major disaster, the state is going to step in. Let's face it. We're on the hook anyway. We are not going to abandon a community. Just like the federal government is not going to abandon a community. That is what we do in this country."

Knowing this, lawmakers "decided that the best thing to stop the bleeding and get the rates down was to reconfigure our Cat Fund," he said.

Galvano said this was done in a bi-partisan move. "Republican and Democrat alike, we said forget the politics. Let's do the numbers and see how we can make meaningful change to the Cat Fund without being irresponsible, without pushing all the burden onto the taxpayers."

One indication that this plan is beginning to work, Galvano said, came on Friday when American Strategic Insurance of St. Petersburg, which holds some 200,000 policies, announced a 20-percent reduction in rates in response to the new insurance law and the changes in the Cat Fund.


Finding the basis for insurance rates

Island homeowner Hank Tremblay expressed his concern about the basis for the rates that insurance companies charge policyholders.

"How do we know they are charging the right rate?" he asked. "How much is too much? How much is too little? I haven't seen any figures on that."

Galvano said the new legislation requires more disclosure by insurers.

"We had an environment with no one at the helm," he said. "But we have changed that. We now say we want more information from the companies so we know the rates are based on actual principles. This is the first time we as legislators were focused more on numbers than on rhetoric."

In response to another question about the financial stability of Florida insurers, Galvano said the new legislation contains several helpful provisions, including a requirement for insurance companies to provide statements under oath.

He said the state Office of Insurance Regulation "is under the gun now" to do a better job. Other state agencies also "have this industry in their crosshairs."


Political 'tap dancing'

Despite Galvano's optimistic report on the potential for improvements in the insurance market, Harris Wainwright remained doubtful about the potential for change.

"Nothing has been solved in Florida," he declared in an interview after Galvano concluded the meeting.

Wainwright, an Islander who worked in what he described as the unregulated arena of insurance before his retirement, said that the insurance industry is one of the largest contributors of campaign money to lawmakers and that the legislative insurance committees have close ties to the insurance industry.

He dismissed the Galvano report as "political tap dancing" and said that lawmakers who approved the new insurance bill were "rearranging the chairs on the deck of the Titanic."


Agents overwhelmed

After noting that insurance agents appear to be overwhelmed and stuck "in a quagmire" as a result of the insurance crisis and the public need for rate information, Islander editor Bonner Joy asked Galvano where else the public can go for a comparative analysis of insurance premiums.

"I agree that agents are overwhelmed," Galvano said.

He said the new legislation contains a requirement for additional education for agents. Meantime, he said, the state Office of Insurance Regulation is a good source. There is also a provision for education outreach for citizens, although it has not yet been implemented.

What about a hotline that policyholders could call for help and for information?

"I like that idea," Galvano said, as he instructed his aides to take note of the suggestion.

In the absence of a hotline, Galvano welcomed his constituents to contact his office for help. "We'll find answers or get you to someone who can."

Galvano emphasized that he strives to represent all the people of his district but has a special feeling for Anna Maria Island because he has lived here, first as a small boy and later as a newlywed. "The issues out here are very near and dear to my heart," he said, stressing that he will continue to seek insurance equity when the general session of the Legislature convenes March 13.

He can be reached by e-mail at or by telephoning his Bradenton legislative office at 708-4968. His mailing address is 1023 Manatee Ave. W., Suite 715, Bradenton FL 34205-4968.