Gov. Crist Vetoes Sweeping Property Insurance Bill

Gov. Charlie Crist vetoed a broad property insurance bill, SB 2044, late Tuesday that would have made it easier for insurers to raise rates and reduce claims costs.

Crist, who is running for a U.S. Senate seat, said in a memo about the veto that he's concerned about the bill's potential impact on policyholders.

"I am most concerned about the expansion of the current expedited rate filing procedure for property insurers that makes it easier to increase Floridians' premiums. During these very difficult economic times, Florida consumers should not have to be concerned with an additional premium increase to their policy," he said. "Additionally, the bill makes troubling changes to the way mitigation discounts are applied. Specifically, responsible Floridians who have already made investments to harden their homes could be unfairly penalized."

But legislators and insurance industry officials backed the bill because they said it would strengthen property insurers battered in recent years by more frequent and severe non-catastrophe claims and higher discounts to policyholders who fortify their homes against hurricanes.

"This legislation would have been a step toward bringing private marketplace solutions to Florida. Without the bill, we continue to confront the problem of a huge and growing financial risk that Floridians face from the next storm," said William Stander, assistant vice president and regional manager of the Property Casualty Insurers Association of America.
Consumer advocates were divided on the bill and Florida Insurance Commissioner Kevin McCarty told Crist in a letter last month that he supports it because it would have helped lower claims costs for insurers; required home insurers to have $15 million in claims-paying reserves by mid-2020, up from $4 million now; and extended a provision requiring insurers to have approval from regulators for rate hikes before implementing them, instead of potentially providing refunds later.

The provisions that Crist said concerned him most would have:

• Allowed insurers to raise rates if they show the “mitigation” discounts were too high and to pass to customers the costs of advertising and agent commissions without interference from regulators.
• Expanded a provision last year allowing insurers to raise premiums by up to 10 percent a year for certain back up coverage costs without full oversight from regulators. The bill this year would have allowed inflation and other costs to be included in the provision.
• Other controversial provisions would have limited the time policyholders have to file a windstorm claims to three years after a hurricane, down from five years, and allowed insurers to withhold part of most claims until the homeowner has a contract to make repairs and “as the work is performed.”