Crist vetoes insurance bill; Atwater blasts governor saying he “mischaracterized” bill
TALLAHASSEE — Deepening an already substantial rift between himself and the legislature, Gov. Charlie Crist tonight vetoed a property insurance bill saying it would likely increase rates.
“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,” Crist said in a veto message issued with only hours to spare before his midnight deadline. If Crist had not acted on the bill Tuesday, it would have become law without his signature.
Supporters of the bill, including Senate President Jeff Atwater, accused Crist of pandering to voters in an attempt to shore up support for his independent run for U.S. Senate and of, perhaps inadvertently, playing into the insurance industries’ hands.
“He yet again has found a way to mischaracterize the substance of legislation to advance his own political career,” said Atwater, R-North Palm Beach, who is leaving office to run statewide for chief financial officer. “Once again he is the master of the game.”
Atwater said the veto would likely be a “win” for Crist with uneducated consumers but is really a win for the insurance industry and will place him even more at odds with the legislature.
“On the political front, if he’s able to get people to buy the story that this is for the consumer and create yet again the mischaracterization of this bill to the people of Florida, that would be his objective and his goal to have a political victory, that ‘I came to bat for the little guy.’ That clearly is not what the case is here,” Atwater said.
Consumer advocates had been divided on the bill’s merits, some strongly opposing provisions they said would have given insurers too much control over rate hikes and how claim payouts are made and spent.
Others, including Florida’s top insurance regulator, argued that the claim crackdowns were necessary to reduce fraud and that the bill (SB 2044) would have benefitted consumers, the state and the insurance industry.
“This bill is an important piece of legislation that benefits the people of Florida by protecting consumers from unsupported rate increases and guarding against disruptions in the marketplace,” Office of Insurance Regulation Commissioner Kevin McCarty wrote to Crist last month urging him to sign the bill into law.
A key provision in the bill that had wide support, including McCarty’s, would have extended a law requiring that regulators approve rate increases before insurers can impose them.
Lawmakers barred insurers from the so-called “use-and-file” rate filings in the aftermath of the 2005-2006 hurricane season.
The bill would have extended that prohibition, set to expire at the end of the year, until 2012.
“There were insurance companies saying, ‘Please let the bill die,’ ” Atwater said. “If the governor thinks he can veto this bill and that the next legislature is just going to create a new suspension, I think that’s a big wish. Next year’s legislature is not going to be inclined to recreate the suspension.”
With the bill’s veto, insurers will be allowed to raise fees on the front end, then issue refunds if their requests are ultimately refused.
“Insurance companies will be clapping” over the return of use-and-file, Atwater said.
But Bill Newton, executive director of the Florida Consumer Action Network, said he’s not concerned about the resumption of -use-and-file.
“The hidden benefit there is that we’ll see what they really want to charge,” Newton said. “It will be interesting right before the election if they have the guts to levy a rate increase.”
A Florida Association of Insurance Agents executive worried, however, that the veto could cause an insurance “meltdown” in the state.
Scott Johnson, executive vice president for the, said he’s concerned there will be an insurance “meltdown” without the legislation.
“It won’t be a very pretty marketplace. . . . There will be a greater influx of policies into Citizens and there will be more companies becoming insolvent,” association Executive Vice President Scott Johnson said of the veto.
The state-created Citizens Property Insurance Corp. is for people whose homes were rejected by other carriers or for those unable to find affordable coverage. Citizens, the state’s largest windstorm insurance provider, already has 1.1 million policyholders.
The bill had been aimed in part at stabilizing the insurance industry in Florida by requiring stronger insurance company finances so that fewer would default and by allowing companies to file for expedited rate hikes of up to 10 percent to meet inflation and emergency demands.
McCarty said it also included a provision meant to help companies that have recently lost money even in the absence of catastrophic storms. The Hurricane Catastrophe Fund has been forced to issue more than $700 million in bonds recently to pay claims from 2005’s Hurricane Wilma and virtually every claim filed four to five years after Hurricane Wilma involved a public adjuster, McCarty wrote to Crist.
To limit such claims, the bill would have required claims to be made within three years and limited the money that public adjustors could make to 20 percent of the reopened or supplemental claim payment.
Without those provisions, Johnson said, “If we have a hurricane, it’s Katie bar the door.”
Critics, though, have argued that some damage, such as mold, may take many years to appear.
Newton also said that the bill also would have prevented regulators from seeing the actual financial records of an insurance company. Instead regulators would have had access only to summary reports of financially struggling companies.
And he noted a Sunday report by the Sarasota Herald Tribune that some of the bill had been written by insurance lobbyists. The story was based on e-mails from the Office of Insurance Regulation to industry consultants.
“That’s just disgusting, awful,” Newton said.
But some consumer advocates remained a fan of the bill.
“While the measure is not the perfect solution to the property insurance crisis, it is a first step and includes many provisions that protect consumers,” said Walter Dartland, executive director of the Consumer Federation of the Southeast, who supported the legislation.
And state Insurance Consumer Advocate Sean Shaw said, “People call this a rate increase bill, but I don’t think it is. It started out with a lot of bad things for consumers, but where it is now is a decent place.”