Our Opinion: Override this veto
Lawmakers should revive consumer choice
| • June 25, 2009
The Florida Department of Insurance Regulation has been claiming that, since 2006, 40 new property insurance writers have brought $4 billion in capital to Florida to cover homeowners in the event a heartbreaker of hurricane turns coastal properties into a rubble.
This new business and big capital coming into the state was, ostensibly, a reason that Gov. Charlie Crist on Wednesday vetoed the Consumer Choice Bill, which might well have made State Farm strongly consider returning to Florida to cover homeowners who have long been loyal customers. State Farm said it was leaving the state following an ugly showdown with the governor two years ago over its homeowner rates.
The veto should be subject to a legislative override, however, and Sen. Mike Bennett, R-Bradenton, said Wednesday afternoon that this is definitely on the table.
An override is a serious move, and a big one requiring lawmakers to come back into session, but property insurance — or the lack of its reliable availability — is a serious, big issue in our state, and hurricane season is well under way.
Along with Mr. Bennett’s desire to see Insurance Commissioner Kevin McCarty resign "for making misleading statements and bending facts … because he has a personal vendetta against State Farm," Mr. Bennett said it’s in the Legislature’s purview to reaffirm, though an override, this legislation that won strong bipartisan support in both chambers during the session.
New capital and new companies are important, because the state’s insurer of last resort, Citizens Property Insurance Corp., is so underfinanced that it couldn’t possible pay off claims in the event of major storm damages.
Yet, according to Department of Insurance financial documents obtained Wednesday by the Democrat, that $4 billion in new capital is not going to fortify the everyday Floridian who has property insurance despair.
That’s because $3.8 billion of that $4 billion is coming from what are known as surplus lines.
What it means
Rep. Bill Proctor, R-St. Augustine, co-sponsor of the vetoed measure, described surplus lines as "companies that operate on a permit rather than a license and typically pick up facilities no one else will insure, like a $4 million house on a key, or a condo high rise on the beach."
"Surplus lines have no regulation on cost, no limits on the upper rates, and they won’t be insuring the average homeowner with a home in Live Oak," Mr. Proctor said. "If you’re going to drive major companies out of the state on the condition that you’ve got these budding new companies that will fill the gap, but in reality $3.8 billion of that $4 billion is in surplus line companies, well, that’s not money that protects the average homeowner."
The vetoed legislation (HB 1171/SB 2036) would have deregulated rates for large, well-capitalized insurers, perhaps 20, allowing them to charge higher rates provided they made the transactions transparent with respect to fully regulated policies. The bill recognized free-market choices consumers want and are willing to pay for when service and security are at stake.
"When you look at the statewide polling, the broad support from every caucus, the Chamber, Associate Industries," said a frustrated Mr. Bennett, "I think the governor’s staff gave him bad advice." He said supporters are talking to other members "to see what the appetite for an override is."
Conversely, said OIR spokesman Ed Domanski, "Commissioner McCarty knows that Gov. Crist carefully considered this bill and has done what is best for the people of Florida."
As we’ve said before, the "people’s governor" should let the people make the decision about who will insure their homes and what they’re willing to pay.
He took away this option in vetoing the Consumer Choice Bill. Lawmakers should reconvene and reaffirm support for homeowners by overriding the veto.