Crist signs 'homeowners' bill of rights'

Article Courtesy of The Sun Sentinel

By Julie Patel
Published May 29, 2008


Gov. Charlie Crist signed into law Wednesday beefed-up penalties for insurers that violate state regulations and an extended freeze on Citizens Property Insurance Corp.'s rates.

The sweeping property insurance bill, touted as a "homeowners' bill of rights," was made up of about 25 parts. The governor approved all but one: a provision providing loans to small insurers.

"The bill contains many important consumer protections that will help keep insurance costs more affordable," he wrote in signing the bill.

Crist's support for the legislation comes as no surprise: He has called for lowering insurance rates and holding insurers accountable since he was elected in 2006. Late last year, Crist recruited a team of attorneys to investigate whether the state should sue insurers over certain rate hikes.

What surprised some observers is that Crist vetoed the only part of the bill that many opponents liked: expanding a program that provides small insurers with loans in exchange for the insurers taking policies from state-backed Citizens. Crist said he likes the program because it helped shift about 200,000 Citizens policies to private insurers. But he doesn't like that the additional $250 million sought for the program would come from Citizens, which may already struggle to pay claims if there is major hurricane.

"The citizens of Florida are already feeling the heavy weight of property insurance and property tax burdens. I do not support risking an additional financial hardship," Crist wrote.

Sam Miller, executive vice president of the Florida Insurance Council, said he hopes the program is expanded next year. "Given its dramatic success, it's unfortunate that ... it's not going to be fully recharged right away," Miller said.

The bill Crist signed Wednesday:

•Extends a provision allowing regulators to block insurers' rate hikes before they take effect.

•Prolongs a freeze on Citizens Property Insurance Corp.'s rates for one year, to January 2010.

•Doubles maximum fines for insurers that violate state law.

•Prohibits insurers from using arbitration panels when there's a disagreement with state insurance officials over rates. Florida was one of only a few states that allowed the use of the panels, which often approved rate hikes after regulators rejected them. It appeared some insurers asked for rates they knew regulators would reject just so they could have arbitrators decide, said Sen. Jeff Atwater, who co-wrote the bill.

•Requires insurers to use state-approved methods to predict the risk of hurricanes, a key factor in setting rates.

•Requires insurers to notify policy holders 180 days before dropping them and to pay undisputed claims within 90 days of deciding the amount of the payment. Atwater, R- North Palm Beach, said consumers complained that insurers were pressuring them to either accept a low-end estimate of a claim or wait months or years for an answer back.

"Now consumers can say, 'I disagree with [the amount] but I'll take the undisputed portion so we can at least get some repairs done, get some temporary housing, begin work on a couple of rooms in the house. You can't hold out on me and wait for me to ultimately crack under pressure,'" Atwater said.

Consumer advocates and regulators said they were delighted.

"It will protect consumers from unnecessary and unsupported property insurance rate increases and more specifically, it will stop insurance companies from bypassing the Office of Insurance Regulations and increasing rates," said Office spokesman Ed Domansky.

Insurance industry representatives had harsh words for the new law, but said it ended up better than it started.

Bob Lotane, spokesman for the Florida Association of Insurance and Financial Advisors, said that freezing Citizens' rates was among the disappointments: It means all Florida homeowners pay more if hurricanes strike and put the insurer in the red. All Florida homeowners help pay Citizens deficits through fees on their policies.

"If you're a customer of Citizens, you've got to be pleased," Lotane said. "But for everyone else ... we'll just have to keep hoping for more hurricane-free years."