Friday, December 17, 2004

Exploding a Santa Claus Myth

"The special interests... [will] lurk in the shadows until the deal is done and then they'll lob hand grenades into it because they never wanted a bill to begin with."

Newspapers around the nation, today, are running wrap-ups of the Florida state legislature's four-day session on emergency hurricane relief. Sad to say, most of the news accounts amount to not much more than generic gift lists of what the lawmakers did, as if our elected representatives assembled in a locked room in Tallahasee and quietly contemplated nothing more than how best to play 'Santa Claus' to we hurricane victims.

For example, you can read the Pensacola News Journal's lead account by Gannett's Tallahasse-based capital correspondent Paul Flemming. Like a loyal myth-maker, in both his main article and a sidebar, he focusses almost exclusively on the cash presents legislators wrapped up and put beneath our tree:
The Legislature ended a four-day special session Thursday by providing money to help rebuild schools, restore beach dunes, pay people's insurance deductibles and cut property taxes on ruined homes.

Including federal money triggered by their actions, lawmakers directed about $1 billion to Florida's storm-stricken communities.
Flemming does acknowledge -- but only barely -- the deep divisions over how to handle hurricane relief that opened up during the legislative session. He quotes Northwest Florida's own Dave Murzin as saying, "We're trying to help as many segments as we can, and yeah, there's probably going to be some criticism."

And Fleming adds this, from House Speaker Allan Beame: "Not everyone got what they wanted. That's how this process is."

What proces is that? Why, the legislative process of handing out holiday gifts, of course. Regrettably, Fleming's account is about as helpful as explaining to your child that Santa Claus can't possibly make all the presents one might wish for because there are so many other children in the world who need presents, too.

For a little more detail on the actual legislative "process" behind the headlines, you could turn to Abby Goodnough's somewhat livelier article in the New York Times. At least she adds a few elfs to the cast of characters in the Florida Legislature's Christmas play, starting with state CEO Tom Gallagher:
Some lawmakers... complained that the relief package did not provide nearly enough money for people who desperately needed it.

* * *
But Tom Gallagher, the state's chief financial officer, said he thought the package sufficed.

"I think the money is pretty close to right," Mr. Gallagher said of the deductible reimbursement plan. "It won't take care of everybody, but it will take care of 75 to 90 percent, maybe even higher."
What really distinguishes reporter Goodnough's dispatch is how she places what happened in Tallahasee in a broader national context and why that is drawing the interest of the insurance lobby:
Florida has often been a trendsetter on insurance. In 1996, it became the first state to establish hurricane deductibles based on a percentage of the insured value of houses and condominiums. Now, many states along the Atlantic Seaboard and the Gulf of Mexico, as well as Hawaii, have such deductibles.

Robert P. Hartwig, the chief economist of the Insurance Information Institute, a trade group in New York, said he did not think other states would follow Florida's lead on applying only one deductible per hurricane season. The general practice in insurance, he said, is that a deductible is applied for each damage claim.

"If someone has ice damage in a Northern state in January and a similar claim in March, it is going to be two deductibles," Mr. Hartwig said.
Few of the news accounts you can see, however, give the reader a real sense of the blood-and-guts politicking between legislators and insurance industry lobbyists that went on over the past four days. For that kind of context, you have to turn to Mary Ellen Klas' superb report in the Miami Herald.

Klas paints a real-world picture that isn't from your 6th grade civics textbook:
Legislators said Thursday that hefty increases in insurance for condominium associations may be one of the unintended consequences to their fast-track approval of an insurance relief bill and vowed to address the issue when they return next year.

* * *
[A]s legislators rushed headlong into the complicated realm of insurance law, they left many questions unanswered. The largest of them is what impact this will have on residential commercial property, a niche market that provides the master insurance policies of condominium associations.

Under those plans, the insurance costs are paid through the monthly fees to the association. So if the insurance rates rise, the burden on residents increases as well.

* * *
[Insurance company] executives told legislators that because the value of the properties they insure is so large, the deductibles to the condominium associations is often in the millions of dollars.

They warned that a switch to a single seasonal deductible, as required in the relief bill, could force them to seek rate increases of up to 37 percent or to stop renewing policies.

"Most of the condo associations that we deal with are already at the breaking point when it comes to insurance costs," said Phil Lyons, a vice president with InSource, a Miami insurance agency. "It's going to get ugly."
Klas manages to peel back the curtain on the legislative "process" so vaguely referred to by other reporters with this money quote from a key legislative leader:
Some legislators wanted to heed the warnings and exempt the condo insurers from the bill legislators passed Thursday, while others, chiefly Senate President Tom Lee, wondered whether industry speculation about rate hikes was a bluff.

"One of the great tactics of the special interests in the process is they'll lurk in the shadows until the deal is done and then they'll lob hand grenades into it because they never wanted a bill to begin with," Lee said.

He also suggested that the companies were also interested in "protecting market share" by being excluded from the ban on multiple deductibles.
Not all legislators were happy about the White Elephant Christmas gifts they handed out, either.
However, [Senator Skip] Campbell, the Tamarac Democrat, warned that if the insurers are correct, "you're going to have a lot of constituents in the state of Florida that are going to be pretty angry at us. ... We're between a rock and a hard place."
It's always terrific to see a journalist at work trying to educate the public about the real legislative process, instead of reaffirming childish myths we were raised on.

After all, in a reality-based world, someone has to say it. Santa Claus doesn't exist. Insurance industry lobbyists do.

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