Governor Kills “Cost Drivers” Bill
Senate Bill 2044 became the primary property insurance bill during the 2010 legislative session, particularly for issues relating to residential insurance. The bill reflected input from a variety of interested parties, including the Office of Insurance Regulation, the insurance industry, the trial bar, and public adjusters. Although a number of parties commented after the session that SB 2044 was not a perfect bill, many believed that it took important steps to address some of the so-called “cost drivers” that have been causing upward pressure on rates. The Florida Office of Insurance Regulation wrote in support of the bill, urging that on balance it contained needed reforms.
Unfortunately, Governor Crist vetoed the bill late on his last day to act— June 1. In his veto message, the Governor expressed concern with expansion of the expedited rate filing process and the possibility that it would lead to rate increases for consumers. Of course, like with base rate filings, expedited rate filings remain subject to review and prior approval by the Office of Insurance Regulation. In addition, the Governor mentioned being troubled by a provision in the bill that would allow changes to the mitigation discounts. The Governor stated that the bill could unfairly penalize homeowners who have invested in hardening their homes. Again, though, the bill would have allowed changes to the mitigation discounts only if approved by the Office of Insurance Regulation, and only to the extent that insurers could show that the amount of the discounts exceeds the expected loss reductions. The bill’s references to the mitigation discount system also followed three recent studies demonstrating that the implementation of mitigation discounts in Florida has been fundamentally flawed.
With the veto, some financial oversight provisions sought by the Office of Insurance Regulation fall by the wayside, as do provisions sought by the industry to curtail the re-opening of insurance claims years after hurricanes have passed. Also meeting their demise at the Governor’s pen are provisions that would have required affiliate financial reporting in certain instances, a provision that would reduced consumer confusion when insurers implement coverage changes, and various public adjuster regulations.