Banking on insurance: proposed legislation now making its way to the floor of the State House and Senate could open doors for more foreign-owned insurers to expand into South Florida

South Florida CEO, Sept, 2004 by Jaclyn Alcantara

The long-term effects of those pieces of legislation can still be felt today, according E.N. Roussakis and D. Thomakos, former Florida International University professors who authored the report "International Banking and its Economic Impact for Florida." In that report they say international banking contributed $3 billion to the state economy during 1999--the most recent data available. At that time, 102 foreign banking institutions were operating in Florida with an estimated $44.4 billion of combined assets. The study shows a 52 percent increase in employment within the Florida international banking industry from 1989 to 1999. That decade also experienced a 2000 percent increase in the number of domestic and foreign customers and bank officials visiting the Florida offices of foreign-owned financial institutions--all tolled, those individuals spent $183 million in the state in 1999, compared with $53 million a decade earlier.

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Fernety says that during the last several years, the repeal of Depression-era federal legislation, which for decades restricted banks from selling insurance and investment products, greatly benefited the domestic financial services industry here in the US. The international insurance industry should benefit, too, he says, from the same kind of freedoms.

"You have banks that are selling mutual funds that carry insurance products," Fernety says. "You have insurance companies that are selling mutual funds that are insurance products. There's a lot of blending now."

The legislation currently under consideration had its genesis in late 2000. Regional, city and industry groups such as the Beacon Council, the Greater Miami Chamber of Commerce, the Broward Alliance, the City of Coral Gables and the Florida International Bankers Association were all early backers of the changes. The original proposal was drafted by attorney Brown, together with Fernety and Codina Group vice president Jack Lowell, who is a former chairman of the Miami Chamber. Tom Cornish, CEO of Seitlin, Florida's largest insurance company, also played a role in advising on drafts of the proposal.

All of them lobbied vigorously for the changes during the 2003-2004 legislative session in Tallahassee, industry sources confirm. The proposed insurance legislation went through several drafts, though Brown admits the idea had probably been around since before 2000. It takes "a while to get from the idea stage to the specific legislation stage and to acquaint legislators and various interested parties with a proposal such as this," he says.

Brown says the real effort began last year when he, Fernety, Lowell and Cornish began to meet with legislators and spend time in Tallahassee during the legislative session, lobbying for the legislation and recruiting the help of Florida senators and representatives.

Representative Marcelo Llorente was the legislation's primary sponsor in the Florida House, and Senator Gwen Margolis was the primary sponsor in the Senate. It took nearly half the legislative session to arrive at a bill that all interested parties could agree on. The legislation passed unanimously in all committees, but, with that late start, did not make it to the floor to be voted on before the session ended.