Crist vetoes property insurance bill

Article Courtesy of The Sun Sentinel

By Bob LaMendola
Published June 25, 2009


Gov. Charlie Crist has vetoed a sharply contested property insurance bill, saying it could limit consumer choices, raise premiums and harm Florida's market for homeowner coverage.

Although the legislation (HB 1171) was called the "consumer choice" bill, it actually would have allowed about 40 of the largest property insurers to start charging virtually any price they want for policies with hurricane coverage, and to bypass regulations the state imposes on other companies.

"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 wrote in a letter explaining his veto Wednesday. "These select property insurance companies will be able to cherry-pick, or sell only to profitable policyholder[s] ..."

Those backing the legislation had said it aimed to widen the array of policies with storm coverage by preventing some big, well-financed national companies from leaving the state or dropping Florida policies, and to bring other companies back.

Gov. Crist should have vetoed property insurance legislation 
If no one's paying the mortgage, who's got the property insurance? Atop the list: the state's largest private property insurer, State Farm, which announced early this year it would pull out of Florida after regulators and an administrative law judge rejected its request to raise rates by up to 67 percent.

House Speaker Larry Cretul, R-Ocala, called the veto a disappointment.

"Florida has demonstrated that over-regulating the insurance industry can actually make things worse for consumers -- not better. It seems reasonable to give homeowners as many choices as possible as they seek to insure their property," Cretul said in a statement.

The Florida Chamber of Commerce had backed the bill, saying it would preserve homeowners' ability to stay with national insurers. Some legislators fear that the state-subsidized Citizens Property Insurance Co., which has more windstorm policies than anyone else, is underfinanced and may not be strong enough to weather a major hurricane.

State Farm did not immediately return calls for comment.

Consumer advocates and small insurers praised the bill's death.

"It would have created a huge unfair business advantage for a few of these very large companies," said Roger Desjadon, president of the small Florida Peninsula Insurance Co. in Boca Raton and a spokesperson for the homeowner division of the Florida Property & Casualty Association.

Crist noted that smaller insurers have brought a "significant amount" of new capital into the state insurance market and have assumed more than 400,000 homeowner policies that formerly were in the Citizens pool.

The legislation would have allowed the large insurers to offer very low rates to attract policies in low-risk areas and to charge very high rates in high-risk areas -- cherry-picking the market, said Walter Dartland, executive director of the Consumer Federation of the Southeast.

And there would be nothing to stop the companies from suddenly jacking up prices or dropping out of the state after making profits on those low-risk policies, he said.

"There are just too many unknowns," Dartland said. "The governor has stood true to his earlier commitment to keep insurance rates reasonable." Crist is running for U.S. Senate.

The bill had been opposed by state Insurance Commissioner Kevin McCarty and six consumer groups.