Presidential contenders should take a stand in favor of insurance reform

AN EDITORIAL OPINION OF THE ORLANDO SENTINEL
Posted November 17, 2007

The odds of the federal government bringing fairness and stability to states' property insurance markets used to run about the same as an umbrella withstanding a hurricane.

Those odds finally are changing, however, thanks to a perfect, well, storm of:

• Insurers relentlessly abusing their policyholders.

• Some federal policymakers responding to that abuse with creative legislation.

• And some major contenders for the White House embracing the cause of reform.

The abuse is legion and growing. Hundreds of thousands of Floridians have seen their policies dropped or their premiums skyrocket in the wake of eight hurricanes from 2004 to 2005, even though Florida lawmakers reduced insurers' risk by providing them with backup insurance that protects them after catastrophic storms. Thousands more loyal policyholders from Georgia to California had their claims denied after Hurricane Katrina and calamitous fires destroyed their properties.

That hasn't been enough for President George Bush to say Washington should carry a big stick to the insurance industry. On the contrary, he favors a hands-off approach and says he'd veto legislation designed to make the industry more responsible.

The next White House occupant, though, could bring relief to millions of policy-owners by agreeing to sign two bills.

Taylor's legislation is critical

The bill from Rep. Gene Taylor of Mississippi would allow folks who get flood insurance through the federal government to also purchase wind policies from Washington. That's a critical fix for a system which, after Katrina, saw companies hurriedly determine that flooding, not wind, damaged homes. That finding allowed them to pocket premiums and make Washington disproportionately pay claims.

The bill from Florida Reps. Ron Klein and Tim Mahoney would allow a state like Florida with a government-sponsored insurance fund to pool, if it wished, its risk with those of other states. The risk would then be shared by private markets by the selling of long-term catastrophe bonds. Reducing the insurance industry's risk, it should allow more competition and with it, more reasonably-priced policies for homeowners.

Any savings that insurers gain, which the Treasury secretary would determine, would be passed on to consumers.

Sen. Hillary Clinton is sponsoring the Klein-Mahoney bill in the Senate, which hasn't voted on it or Mr. Taylor's bill. The House has passed both bills. Fellow White House candidate John Edwards supports Klein-Mahoney, while Rudolph Giuliani generally supports the principles in both bills. Mitt Romney says he's open to supporting the needs of homeowners. Other major candidates are saying little.

Voters wanting a say in whether Washington reforms the property insurance landscape would do well to remember that come the next election.

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