OPINION: Douglas C. Lyons Column, July 20, 2007

By Douglas C. Lyons, South Florida Sun-Sentinel

Jul. 21--There's a conflict brewing in the Sunshine State that, if the combatants on both sides aren't careful, could blow up into a full-scale war.

It's nothing approaching, say, the Israeli-Palestinian conflict, although the issues are arguably just as complicated. This political skirmish, though, could leave state government with some very deep scars and many state residents with even higher premiums.

Call it the War Between the Rates.

On one side, there's Gov. Charlie Crist, a big proponent of reining in sky-high premiums. Crist, who's only been in the job six months, wasted little time staking out his position, and his populist stance against Big Insurance has sent tremors throughout the state.

"I'm concerned about broken promises from the industry," Crist said earlier this month.

On the other side is the insurance industry, which until recently has had it pretty good with the powers that be in Tallahassee. Consumer complaints about coverage they call a "racket?" No sweat. Double-digit rate hikes on new premiums? No problem. The lobbyists simply worked the halls of the capitol, and that was that.

Today, those lobbyists are still working the halls, but things are different. There's that "People's Governor" guy railing away at the robber barons, the state Insurance Commissioner who's actually pushing for lower premiums, and even state lawmakers aren't their usual compliant selves.

It's getting so bad that the one politician who's shaping up as a voice of reason is Alex Sink, the state's chief financial officer, and she's never been in the industry's pocket. What gives?

As Robert Hartwig, Insurance Information Institute president, put it: "It's impossible for private insurers to compete economically in the state anymore. This is the course the governor has set."

In recent months, State Farm has taken the lead in what appears to be an expanding conflict. Just this week, the company announced it will drop 50,000 property insurance policies from its rolls. Florida's premiere insurance carrier also is busy on another front. The firm is a big proponent of doing away with the state's no-fault automobile insurance. No Fault supporters include attorneys, hospitals, physicians and many state lawmakers. Count Sink and Crist as proponents, too.

State Farm and other auto insurers argue that no fault is rife with fraud and needs to be replaced with a cheaper alternative.

At the moment, many lawmakers aren't buying that claim, and the governor already said he favors extending no-fault. Both sides are pushing positions in letters to the editor and radio and television commercials, and there's talk that lawmakers may pass legislation that would extend no-fault insurance and iron out the program's fraud problems during a special session in September.

By my count, things aren't looking up for the insurance industry. In the minds of too many Floridians, insurers rate somewhere between the paparazzi and snake-oil salesmen. Their promises of future savings, even as they drop policyholders and campaign against a still-popular auto insurance program, just doesn't wash.

On the other hand, there's a downside that can't be filled by populist rhetoric or the urge to simply rollback premiums. Insurance is still a matter of risk, and someone has to pony up in a time of loss. Right now, a greater share of those potential costs will be borne by the taxpayer.

As the two sides dig in their heels, there's a crying need for a peacemaker. Unfortunately, none seems to be on the horizon, and that's too bad for both the ratepayers and taxpayers of this state.

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