Crist vetoes insurance bill
Lawmakers may override to OK higher rates
By Jim Ash
and Paul Flemming
TALLAHASSEE — Gov. Charlie Crist on Wednesday vetoed a heavily lobbied bill that would have let some companies sell homeowners policies at whatever price the market would bear.
With the veto, Crist stayed true to policies he has pushed since he first took office in 2007. He has said insurance rates are too high and companies are gouging consumers.
Sponsors of the bill say rates are held artificially low and don’t reflect extra charges Floridians will pay if a hurricane sends state-run insurers into deficits.
In a message accompanying his veto of HB 1171, Crist repeated his objections to high rates.
“This will likely result in significant and unpredictable rate increases that, during these economic times, people can simply not afford,” Crist wrote.
The bill was sought by parts of the insurance industry and some business advocacy groups that touted how it would allow consumers to make their own choices about insurance companies and the rates they were willing to pay. Though rate-regulated companies would still sell policies in Florida, those with enough reserves would be allowed to offer policies at whatever rate they chose.
The bill, sponsored by Sen. Mike Bennett, R-Bradenton, and Rep. Bill Proctor, R-St. Augustine, was known informally as the State Farm bill because it could have reversed that company’s ongoing withdrawal from the state.
John Pollack, president of Oswald Trippe and Co., an independent insurance agency based in Fort Myers, said other insurance companies will have to absorb the coverage left by State Farm.
“It’s going to have an impact on the capacity of all the other providers,” Pollack said.
“It will have to be a bunch of smaller players that will have to gobble that up.”
Bennett and Proctor on Wednesday said they would consider mounting a drive to override the governor’s veto.
“Given the overwhelming legislative support, the overwhelming public support (seeking an override) is something that should be thoughtfully considered,” Proctor said. “Of course, I’m disappointed. The problems that the bill was to address remain the same problems.”
Consumer advocates applauded Crist’s action.
“This bill was an invitation to insurers to game the Florida regulatory system and abuse consumers,” said Robert Hunter of the Consumer Federation of America.
State Farm, once Florida’s largest property insurer, is in the process of canceling all its homeowners policies after state regulators rejected a proposed statewide average 47 percent increase. The bill Crist vetoed would have allowed State Farm and other companies to sell homeowners policies at any price they chose.
“The Consumer Choice Act would have allowed many Floridians who can afford property insurance to stay with their current, trusted company rather than being forced to rely on Citizens,” according to Barney Bishop, president of Associate Industries of Florida.
But one insurance group, representing smaller Florida-based companies, opposed the bill and was happy with Crist’s veto.
“This bill would have further diminished affordable choices for Floridians and would have eventually dumped more policies into the state-run insurance program Citizens,” according to a statement from the Florida Property & Casualty Association.
The bill passed both houses with wide margins — 105-13 in the House and 27-9 in the Senate — meeting the two-thirds majority required to override a gubernatorial veto, although just barely in the Senate.
“The Legislature has constitutional authority, too, and we are examining and exploring all of our options,” Bennett wrote.
Proctor said he disagreed “adamantly” with representations Crist and Insurance Commissioner Kevin McCarty have made about the ability of new and smaller insurance companies to enter the Florida market and pick up the slack left by State Farm’s and other companies’ departure.
He said state-run Citizens Property Insurance is unprepared to cover losses if a big enough hurricane hits Florida and Floridians are unaware of the extra charges they face to pay off deficits at Citizens and the state’s Hurricane Catastrophe Fund. His bill, he said, would have kept more policies covered by the private market. The rates Crist touts, Proctor said, are illusory.
“You pay a low price, but you don’t know what your costs are” in the event of a big hurricane, Proctor said.