Updated: 8:00 p.m. ET May 21, 2006

It might not be the best time to be a Republican running for office in Florida.

The ink from Gov. Jeb Bush's pen that signed a massive Republican-backed property insurance bill into law has barely had time to dry, and already public debate had begun about the new law's effectiveness in shoring up the state's ailing insurance industry -- and its possible harm to homeowners.

In fact, just a week after the $1.25 billion bill passed -- and before the governor even signed it -- State Farm announced plans to hike its rates statewide by almost 60 percent, and Allstate revealed plans to lop off 174,000 policyholders.

Those actions signaled new worries for some lawmakers and consumer advocates.

"The bill does nothing to prevent substantial price increases and future cancellations of policies," says Sen. Ron Klein, D-Boca Raton.

"This bill is not being roundly accepted," says Bill Newton, executive director of Florida Consumer Action Network, a statewide citizens group with 40,000 members. "People are saying it's a flop -- and a lot will depend on the weather."

And some say anger over rate hikes and cancellations may spill over into local legislative races, as well as the statewide campaigns for governor, chief financial officer and attorney general.

"People are tired of annual double-digit property insurance increases," says Susan MacManus, a professor of public administration and political science in the University of South Florida's government and international affairs department. "It could hurt the Republicans. When you have sharp rate increases, you get people's attention."

Who's to blame?
Many state lawmakers already are catching an earful from homeowners who are upset about significant insurance rate increases on the way that could force them out of their homes -- increases they feel are partly because of the new law, which lets insurers raise rates with less state regulation.

Also, homeowners are unhappy about having to help bail out Citizens Property Insurance Corp. -- the so-called state-run insurer of last resort. The new law pays only part of Citizens' deficit, shifting about $1 billion in red ink to be paid off by Florida homeowners during the next 10 years.

Democrats in both the Senate and the House refused to vote for the 157-page bill, saying Republicans rewrote the thick reform package at the 11th hour without Democrat input, which means there virtually was no time for any meaningful debate.

When he got his first look at the newly negotiated bill at 5:15 p.m. on the day before the legislative session ended, Democratic Sen. Steven Geller, vice chairman of the Senate Committee on Banking and Insurance, says he was appalled. "I asked if they had any idea what this would do to insurance rates," he says.

At that point, it was too late for Democrats to come up with their own version of the bill, says Geller.

"This is the Republican insurance plan -- it was written by the Republican Party and their friends in the insurance industry," he says. "I think the bill is terrible."

Geller says the three main property insurance issues are availability, affordability and solvency of the ­insurance companies.

Republicans, he says, addressed only two of those issues. They believe, he says, that deregulating rates means more insurance companies will return to do business in Florida, which will lead to greater availability and solvency. "But how many citizens will be able to afford it?"

Klein, who has asked Gov. Bush for a special session to deal further with property insurance issues, has similar concerns.

"The Legislature once again bought into the idea of making insurance companies even more profitable so more insurers will come to Florida," he says. "Unfortunately, we have done that over and over without the intended result."

Most Republicans, meanwhile, staunchly defend the bill.

"Only competition will drive down costs," says Republican Rep. Dennis Ross of Lakeland, chairman of the House Insurance Committee.

He adds that insurance rates are going to go up, regardless of any insurance reform. "It's not fair to consumers, but we have to be honest with ourselves -- the risk is there," says Ross.

After Hurricane Andrew, there should have been incremental rate increases, he says. "Then we wouldn't have the sticker shock we're seeing now."

'Bandage over a bullet wound'
However, a few Republicans -- including Rep. Randy Johnson of Winter Garden, who is running for state CFO -- voted against the bill.

"It's a bandage over a bullet wound," says Johnson. "I see nothing in it that benefits Florida's families. This is a ticking time bomb about to explode in Florida -- and we are just days from the beginning of a new hurricane cycle."

He says he is offended by that fact that insurance companies threatened the Legislature with leaving the state if the bill didn't pass, and then just days after it did pass, they announced rate hikes and policy cancellations.

"They negotiated in bad faith," says Johnson. "I think the insurance companies have ravaged the state worse than any hurricane -- and I'm mad as hell about it. They didn't even feel the need for the governor to sign the bill before they let the people down one more time."

Sen. Mike Fasano, a Republican from New Port Richey, also opposed the property insurance reform bill. He says he supported the bill's provisions dealing with sinkholes and providing money to help people prepare their homes against future hurricanes.

However, he voted against the bill because it still requires homeowners to help bail out Citizens.

Johnson and Fasano, meanwhile, take issue with Geller's assertion that Democrats were shut out of the process. "Nothing stopped them from offering amendments to change the bill," says Fasano.

Johnson adds that he is a conservative Republican who voted against the bill. "To say Republicans don't care and are on the hook is disingenuous," he says.

Political fallout?
David Johnson, a political analyst and CEO of Strategic Vision LLC in Atlanta, says the issue could hurt Republicans such as Rep. Johnson if the Democrats succeed in pegging this as a Republican bill.

The only saving grace Rep. Johnson has is that Tom Lee, his opponent in the primaries, has drawn opposition because of his stance on ethics reform, says David Johnson, who is not related to the local legislator.

Who wins the primaries will depend on whether the voters who show up are more concerned about ethics reform or property insurance, the analyst says. "People who vote in primaries are activists," he says.

And if Rep. Johnson wins in the ­primaries, then his Democratic opponent Alex Sink could say the only reason he voted against the insurance bill was because he knew it would pass, the analyst adds.

Rep. Johnson, though, says he's running for state CFO to help alleviate the insurance situation.

In fact, he says he'd like to tell the cherry-picking insurers who won't sell homeowners insurance in Florida to pack up the rest of their insurance lines such as auto and life insurance and peddle it elsewhere.

"Insurance in Florida is profitable," Rep. Johnson says. "The industry had its most profitable year last year -- even with Hurricane Katrina."

Ross, the Lakeland lawmaker, believes insurance alone won't solve Florida's problem. "The best thing we can do is to harden our dwellings to withstand the storms."

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By Susan Lundine
Orlando Business Journal

© 2006 MSNBC.com

URL: http://msnbc.msn.com/id/12911643/