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Florida tackles costly liability insurance. Bill to roll back premiums drives some insurers to quit the state

The trial lawyers and insurance companies that fall on either side of the liability insurance crunch are casting a cold eye on Florida these days. To a gathering storm of new laws around the country aimed at controlling the dollar awards in liability suits, Florida is adding a radical twist. Legislators here are trying to balance out award restrictions, dubbed ``tort reforms,'' with a blanket rollback of liability insurance rates.

Such an insurance package has passed the Florida Legislature and the governor is expected to sign it next week. The new law would require, beginning July 1, a freeze on the rates businesses pay for liability insurance, and for the last three months of this year would cut rates by 40 percent. As of next year, rates would be pegged at January 1984 levels -- unless the state insurance commissioner decided specific rates didn't allow for ``reasonable profits.''

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Ironically, the businesses whose liability rates will be rolled back are troubled by the bill. Businesses have more trouble getting liability insurance in the first place than in paying high premiums. According to John Shebel, president of Associated Industries of Florida, a quarter of his member companies had trouble getting coverage at any price.

Mr. Shebel says the rate rollback is going to make it harder for Florida companies to get insurance. ``You can't intimidate [insurance companies] who operate on a multistate, international basis . . . . Why would they write insurance in this state when they can make better money elsewhere?''

In fact, since the bill was introduced, at least 14 major insurance companies have stopped writing commercial liability policies in Florida. Whether this fast exit is a temporary lobbying tactic or a long-term business decision remains to be seen.

``This bill was not a bill of careful thought or even rudimentary consideration,'' says Steve Masterson, executive director of the Academy of Florida Trial Lawyers. ``They have done terrible damage to all kinds of people.''

``I think the Florida thing was punitive in nature,'' says Dennis Connolly, vice-president for liability at the American Insurance Association. ``It is so excessive that only under extreme emotion would it pass.''

``We just don't believe we can make money,'' says Albert Abend, spokesman for Aetna Life, one of the companies that has stopped writing new policies. Until the insurance bill passed both houses of the Legislature, Aetna was pumping more of its energy into Florida as a promising state for writing insurance. But the bill, says Mr. Abend, ``is so onerous that we couldn't justify our current production levels or any expansion.''

``There's a lot of grandstanding'' among insurance companies, says Shebel. ``There's a lot of `We can't let it happen in Florida because it will spread to other states.' '' There is also a real concern that insurers will be forced out, he adds.

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All this furor has not alarmed the Florida Insurance Commissioners' office, which backed the bill, where spokesman Michelle McLawhorne notes that some 500 companies sell insurance in Florida. But just in case, the commission is putting together a how-to kit on self-insurance pools for professional or industrial associations.

The tort-reform aspect of Florida's legislation was milder than in many other states that have made recent changes. Jury-awarded damages for pain and suffering will be capped across the board at $450,000. Joint and several liability -- the deep-pockets principle whereby wealthy defendants pay more damages than they are responsible for -- will be restricted. So far this year, eight states have already restricted joint and several liability, according to the American insurance Association. Nine states have capped damage awards for pain and suffering. Five more have restricted awards for punitive damages. Two have even capped lawyers' contingency fees.

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