Crist Vetoes Florida Property Insurance Bill

Despite the urgings of Florida Insurance Commissioner Kevin McCarty and others, Gov. Charlie Crist has vetoed the state’s omnibus property insurance bill passed at the close of the 2010 legislative session.

Contending that SB 2044 was unfriendly to consumers, Gov. Crist noted in particular that he was “most concerned about the expansion of the current expedited rate filing procedures for property insurers” and wrote that the bill makes “troubling changes in the way mitigation discounts are applied.”

Those two changes were high on the “want list” of property insurers, along with language in the bill seeking to rein in the length of time that public adjusters could file claims on behalf of homeowners.

Reaction from the bill’s proponents has been swift. The Property Casualty Insurers Association of America (PCI) issued a statement noting PCI is “disappointed” over the veto, warning that “without the bill, we continue to confront the problem of a huge and growing financial risk that Floridians face from the next storm.”

"A good-faith effort was made to pass a bill that tackled those problems," said Florida Insurance Council Executive Vice President Sam Miller. "Unfortunately, the governor disagreed. There's just a gentlemen's disagreement."

Current Senate President Jeff Atwater, R-North Palm Beach, and a candidate for the post of chief financial officer, blasted Gov. Crist’s action. “He yet again has found a way to mischaracterize the substance of legislation to advance his own political career,” Sen. Atwater said. “Once again, he is the master of the game.”

Sen. Atwater said the veto would likely be a “win” for Gov. 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,” according to Sen. Atwater.

The bill’s sponsor, Sen. Garrett Richter, R-Naples, was equally outspoken: "The only way I could rationalize a veto is pure politics," he said.

Scott Johnson, executive vice president of the Florida Association of Insurance Agents, expressed concern about the veto’s effects: "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." (He was referring to Citizens Property Insurance Corp., the not-for-profit, tax-exempt government entity providing property insurance to homeowners and businesses in the state unable to get coverage.)

Neil Alldredge, senior vice president of state and policy affairs for the National Association of Mutual Insurance Companies (NAMIC), said that Gov. Crist “just doesn’t get it.”

“Florida needs to create a business climate and competition-based pricing in which the free market is alive and well for the purchase of insurance,” he said. “Such a market helps build a clear understanding of the true cost of risk, which would promote wiser decisions with a long-term view regarding land-use planning and resource management. Only then will consumers have plentiful and sustainable choices for coverage.”

Instead, according to Mr. Alldredge, “the governor decided to begin hurricane season by vetoing…legislation that would have continued the slow but steady progress that had been occurring for insurance consumers and companies in Florida.”

Mr. Alldredge added that “while the bill did not contain provisions that would have allowed insurers to appropriately and accurately match rate to risk and encourage competition that can only benefit insurance customers, NAMIC members and their policyholders would have benefitted from the provisions that addressed cost drivers, such as public adjuster expenses, replacement cost claims, reinsurance premiums and inappropriate mitigation discounts.”

The NAMIC spokesman said “the governor’s decision to veto this bill is nothing more than pandering to voters as he vies for a Senate seat, but those who understand the issue and the importance of this bill will know exactly why he made the decision he did.”

COMMERCIAL LINES BILL SIGNED

In an action garnering much less attention, Gov. Crist also signed into law SB 2176, which allows an insurer to implement rates for most forms of commercial insurance without the approval of the Office of Insurance Regulation, provided that the insurer notifies the regulator of any rate changes no later than 30 days after the effective date of the change.

The regulator may subsequently review the rates to determine whether they are “excessive, inadequate or unfairly discriminatory.”

Cecil Pearce, vice president of state affairs, Southeast Region, for the American Insurance Association (AIA), said “legislators recognized the need for balanced regulation that will further increase competition and promote a healthier commercial insurance market to the benefit of Florida’s businesses. Insurers will be better positioned to respond to the state’s evolving commercial insurance needs in the years ahead.”

The bill, which became law upon the governor’s signature, also has workers’ compensation implications. According to the bill’s summary, the new law:

• “Provides for interpretation of provisions relating to workers' compensation benefits for certain services performed by off-duty deputy sheriffs.

• “Prohibits an association, fund or pool created for the purpose of forming or managing a risk management mechanism or providing self-insurance for a public entity from requiring its members to give more than 60 days' notice of the member's intention to withdraw from the association, fund, or pool, etc.”