News & Updates


EDITORIAL: Vetoing choice

June 25, 2009 08:00:00 AM

As expected, Gov. Charlie Crist on Wednesday decided that Floridians aren’t responsible enough to make their own decisions when insuring their property. They need government to do it for them. 

Crist vetoed HB 1171, the "Consumer Choice" bill that would have allowed large, well-capitalized property insurers to sell policies with unregulated rates. The measure passed the Legislature by overwhelming margins – 105-13 in the House and 27-9 in the Senate – and opinion polls showed a healthy majority of Floridians favored the idea.

Nevertheless, Crist, who since his election campaign has planted his political flag firmly on the turf of keeping insurance rates "affordable," killed the bill on the grounds that it would "result in significant and unpredictable rate increases that, during these difficult economic times, people can simply not afford."

Who is he to decide what some people can afford? The whole point behind HB 1171 was to add one layer of choice to the Florida insurance market, which currently consists primarily of taxpayer-backed Citizens Property Insurance Corp. and several new, small – and potentially undercapitalized – private companies. Most of the big insurers have deserted the state because regulators have prohibited them from setting premiums at market prices that reflect actual risk.

Indeed, Crist has supported government efforts to set rates artificially low, the result of which has been to leave Citizens and the state’s Catastrophe Fund dangerously underfunded in the event of a major hurricane. A significant storm or two could bankrupt Florida. In a welcome nod to reality, the governor last month signed legislation that lifted a freeze on Citizens rates, imposing a 10 percent increase. However, the rates would need a 40 percent hike to make the government insurer actuarially sound.

The state desperately needs a healthier private insurance market to relieve the pressure on the public option by returning Citizens to its original intent of being the insurer of last, not first, resort (and better yet, eventually phasing out Citizens altogether).

HB 1171 was a modest attempt to lure large insurers back by allowing them to sell policies at unregulated prices (all other state insurance regulations would still apply). Consumers were free to reject them and sign up with Citizens or a smaller competitor that sells cheaper regulated policies. However, some Floridians might be willing to pay more for the kind of coverage they desire – and for the piece of mind of knowing they have a well-capitalized company behind the policy if disaster should strike.

The bill mandated several consumer protections for these new policies, such as requiring a side-by-side comparison of the unregulated vs. regulated policies. Consumers would be told, in extra-large type, that "the rate for this policy is not regulated by the Florida Office of Insurance Regulation and may be higher than rates approved by that office," and they would have to acknowledge in writing that they are voluntarily choosing to purchase such a policy.

But even that amount of hand-holding and infantilizing of Floridians couldn’t persuade the "People’s Governor" to trust the people to make an informed choice.