Florida Consumers Score Few Wins in Weak 2008 Legislature

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Florida consumers lost more than they won in the 2008 Legislature.

In one of the biggest consumer setbacks of the 2008 session, lawmakers adjourned their regular 2008 legislative session May 2 without enacting a bill to cut liabilities of the state Hurricane Catastrophe Fund (CAT) that has partly offset insurers’ storm losses since 1992. The fund has been a controversial feature of state insurance law.

In 2007, Florida lawmakers had dramatically increased the amount of insurer liabilities that would be covered by the CAT Fund.

In ramping up the state’s reliance on the CAT Fund, lawmakers accepted insurance lobbyists’ arguments that by shifting reinsurance liabilities from insurance companies to a state-backed fund, Floridians would see dramatically lower insurance rates.

As AARP members around the state know, insurance rates never really dropped by much. But insurance regulators believe the CAT Fund arguably has moderated rate increases–meaning that as bad as Floridians’ property-insurance woes have been, they could have been even worse.

Now, because lawmakers failed to act in 2008, more bad news could be coming. Florida Chief Financial Officer (CFO) Alex Sink (D) had warned that the next big storm could exhaust the fund, causing big assessments on home owners’ and auto insurance policies.

Working with Sink and AARP, state Sen. Bill Posey (R-Rockledge) and state Rep. Ron Reagan (R-Sarasota) authored Senate Bill 2156, which would have cut CAT liability by $3 billion, ultimately saving Floridians up to $217 million annually. But top state leaders were unable to come to final agreement. The bill died on the session’s last day.

The failure on property-insurance reform was similar to the session overall, AARP’s top state leader said.

“In a year in which Floridians are facing long odds, the 2008 legislative session too often fell short,” said AARP Florida State Director Lori Parham. “We recognize that the Florida Legislature managed to soften the worst impacts of a disastrous fiscal situation, given their decision not to raise additional resources. But even this session’s successes were weak.”

Lawmakers approved a bipartisan plan (Senate Bill 2082), put together by Florida CFO Sink, state Sen. Mike Bennett (R-Bradenton) and state Rep. Clay Ford (R-Pensacola), to toughen penalties on financial advisers who target Floridians age 65 and older by selling them inappropriate annuities investments. AARP had backed the bills. However, lawmakers watered down penalties for breaking the new law from felony to misdemeanor status.

Finally, lawmakers approved a “green energy” plan (House Bill 7156) backed by Gov. Charlie Crist. However, led by state Sen. Burt Saunders (R-Naples) and urged on by AARP, lawmakers dropped plans to require utilities to get 3 percent of their power from solar sources, regardless of consumers’ costs.

Under the revised version of the legislation, utilities companies are still encouraged to use “clean and green” power sources to generate power, but state utilities regulators and lawmakers will consider both consumer costs and environmental benefits in making a final decision. Also, under provisions strongly supported by AARP, the final decision on any “green energy” rate hikes will by made by elected lawmakers, not by appointed regulators.

Lawmakers also took what AARP described as a “good first step” in enacting limited protection for Floridians facing mortgage foreclosures. Foreclosures are skyrocketing nationwide—up 57 percent from a year ago, at press time—and Florida homeowners are being hit hard. In the early part of this year, about 7.5 percent of homeowners with loans were delinquent in paying them (a spike from the usual rate), and about 3.2 percent of homes had been foreclosed on as of late 2007.

Certain individuals, posing as “foreclosure rescue consultants,” are preying on Floridians’ anxieties by arranging for such costly refinancing terms that homeowners can’t possibly make their new payments. The “consultant” often walks away with a fat fee while the homeowner facing foreclosure is in worse shape than ever.

Working with Florida Attorney General Bill McCollum (R), state Sen. Mike Fasano (R-New Port Richey), and state Rep. Clay Ford (R-Pensacola), proposed standards for “foreclosure rescue” agreements. The standards would include a three-day window for residents to back out of bad deals, and would place limits on how much “rescuers” could jack up home prices in house-repurchase agreements. The legislation (House Bill 643), approved on the session’s last day, still awaits Gov. Crist’s review.