TALLAHASSEE - Cornered by what they call a crisis in Florida's business climate, state officials on Tuesday accepted the prickly proposition of increasing the government's role in the battered property insurance market.

The state Cabinet has given its blessing to the formation of a companion to Citizens Property Insurance Corp. to provide coverage to commercial enterprises. This comes despite an oft-repeated goal of the Legislature and Cabinet to reduce the size of state-run Citizens, now Florida's largest homeowners insurer, and spur participation by private carriers.

"Nobody wants to get deeper into it, but we have businesses who are going to leave if they don't get coverage," said Belinda Miller, deputy general counsel in the state's Office of Insurance Regulation.

The Cabinet action came as state officials traded a flurry of paperwork around the Capitol in the past few days sounding the alarm on the commercial market crisis and suggesting fixes.

"This is a crisis that is deepening in Florida and will potentially jeopardize the future economic development of our state," Insurance Commissioner Kevin McCarty told Cabinet members.

McCarty released the results of a survey conducted by his office that received 1,914 responses. The survey suggested businesses are facing widespread problems obtaining coverage or affording escalating premiums. It showed that 42 percent either had been canceled or not renewed by their insurer in the past six months.

Thirty-two percent said they were able to secure new coverage, but with higher rates, less coverage or both. Some said they might relocate their businesses to other states because of the insurance difficulties.

The Cabinet technically moved to revive the Property and Casualty Joint Underwriting Association, which was created by statute in 1986 to deal with a commercial insurance crisis then. It was eventually deactivated, but remains valid in state statute.

The Cabinet - made up of Gov. Jeb Bush, Chief Financial Officer Tom Gallagher, Attorney General Charlie Crist and Agriculture Commissioner Charles Bronson - voted unanimously to allow McCarty's office to begin its process to revive the JUA.

That process can be cumbersome, with required public notification and workshops typically consuming 90 days or more. That timetable would not provide relief in the current hurricane season, but McCarty said the process could be dramatically fast-tracked should the Cabinet seek an emergency rule to deal with it.

The Cabinet intends to do that at its next meeting, on Aug. 15. The JUA could be up and running on or about Sept. 1, McCarty said.

Many of the details of the new JUA have not been settled.

As drafted, the proposal would allow the JUA to either directly write commercial property insurance or offer reinsurance, a backstop of insurance for insurers. It is the tightening of the world reinsurance market, headed by massive overseas companies, that has sparked the commercial crisis in Florida.

State officials appear to be leaning toward organizing the JUA as a reinsurer rather than a direct writer.

Bush said he was "wary" of having the JUA as a direct insurer. "It may be the only option we have, but it gives me the heebie-jeebies," he said.

The governor has also appointed an insurance reform committee headed by Lt. Gov. Toni Jennings that will hold its first meeting next week. Among its first topics of discussion will be loosening up the state-run hurricane catastrophe fund, a reinsurance vehicle for the residential market.

Gallagher, the state's CFO, is advocating making it easier for insurers to tap into the fund by lowering the threshold from $5.2 billion in storm losses to $3 billion.

Bush hinted that a special legislative session could be called to make statutory fixes recommended by the committee. That brought criticism from House Democratic leader Dan Gelber of Miami Beach, who wrote to Bush: "Floridians elect legislators to craft policy, not as a rubber stamp on executive branch ideology."

Reporter Jerome R. Stockfisch can be reached at (850) 222-8382 or

jstockfisch@tampatrib.com.