Gov. Crist's veto sends State Farm packing
Article Courtesy of The Palm Beach Post
Published June 25, 2009
TALLAHASSEE — State Farm officials said they have no option but to leave Florida after Gov. Charlie Crist on Wednesday vetoed legislation to let them offer unregulated property insurance rates.
"At this point, we have no choice," State Farm Florida spokesman Chris Neal said.
State Farm, Florida's largest property insurer, announced in January that it would discontinue 1.2 million policies in Florida due to the state's rocky insurance market. This week, company officials said they would reconsider if Crist OK'd the bill to let the state's most highly capitalized insurers offer unregulated rates.
But Crist rejected it Wednesday, saying consumers would get higher rates and little protection.
"This will likely result in significant and unpredictable rate increases that, during these difficult economic times, people simply cannot afford," wrote Crist, who approved nearly $2 billion in higher state fees and tobacco taxes earlier this year to balance the state budget.
The governor's view on the insurance bill (HB 1171) conflicts with most Republicans in the GOP-dominated legislature, where the bill passed 105-13 in the House and 27-9 in the Senate.
"It's disappointing," said Sen. Mike Bennett, R-Bradenton, one of the bill sponsors. "But we're trying to get more detailed information from the governor's office about what exactly he would like to see changed to make it more viable."
Bennett said there was little chance for lawmakers to override the veto, but he would not dismiss the possibility.
The bill passed with more than the two-thirds needed for a rare override, but the procedure would need approval in a special session, which could happen later this year if the tax shortfall continues or if lawmakers return to ratify a gambling compact with the Seminole Indians.
For the issue to be debated in a special session, it would need the blessing of Senate President Jeff Atwater, R-North Palm Beach, who let the bill pass his chamber in the spring despite his own opposition. Atwater could not be reached on Wednesday.
House Speaker Larry Cretul, R-Ocala, said the veto was a "disappointment."
"Florida has demonstrated that over-regulating the insurance industry can actually make things worse for consumers - not better," Cretul said in a statement.
During the spring lawmaking session, the legislation was often called the "State Farm bill," although it also would have applied to other large insurers in the state. State Farm officials preferred to call it the "Consumer Choice Act."
Supporters said homeowners would have been protected because the bill required unregulated companies to inform customers about what rates they could receive from the state-run Citizens Property Insurance Corp. or a fully regulated private insurer.
"Charlie Crist has declared war on Florida homeowners," said Eli Lehrer of the Competitive Enterprise Institute. "He is taking away choices, taking away the market and taking away freedom."
But Crist rejected the idea that consumers would get a choice under the bill.
"On the contrary, the bill actually gives the 'choice' to a select group of property insurance companies and allows them to decide who they are willing to sell a non-regulated policy," Crist said.