By Shannon Colavecchio
Resisting pressure from a
chorus of large and politically influential industry groups, Gov.
Charlie Crist just vetoed legislation aimed at enticing large property
insurance companies to write policies in Florida. (veto message here.)
"Although coined the 'consumer choice' bill, there is no provision in House Bill 1171 that allows consumers to review options and make a choice that best fits their needs," Crist wrote. "On the contrary, the bill actually gives the 'choice' to a select group of property insurance companies and allows them to decide who they are willing to sell a non-regulated policy."
The
decision all but ensures State Farm Florida will push ahead with plans
to stop writing policies for property owners here — an exit that
insurance experts warn could be devastating to hurricane-prone Florida.
Critics of HB 1171, meanwhile, lauded Crist’s veto as a move that keeps property insurance affordable for Floridians.
HB
1171 would have made it easier for big insurers like State Farm to
raise customers’ premiums, now subject to significant state regulation.
State Farm executives say state regulators are not allowing them to
charge realistic market rates that cover their potential storm losses,
and they have announced plans to gradually withdraw from the insurance
market here.
By relaxing rate regulation, lawmakers hoped to lure
State Farm and other large companies back to Florida. State Farm
officials never explicitly promised to stay if HB1171 were to become
law, but in a June 16 letter to Crist, State Farm Florida president Jim
Thompson said passage of the legislation would prompt the company to
re-examine its options” for dealing with the company’s “rapidly
deteriorating financial condition” in the Sunshine State.
Crist’s
veto was not surprising, given his outspoken disdain for the rates
charged by large insurers. As governor, he has focused on lowering
property taxes and insurance.
But the veto came in spite of a
massive letter-writing and e-mail campaign by powerful groups such as
the Florida Chamber of Commerce, Florida Bankers Association and
Associated Industries of Florida that urged Crist to sign the bill.
Bill
supporters including Florida Tax Watch and groups representing
realtors, home builders, and mortgage brokers argued that consumers
should have the choice of paying more for a proven, financially solvent
company like State Farm.
The Florida Chamber recently released a
poll recently that found 60 percent of Florida voters believe Governor
Crist should sign HB 1171, while 24 percent disagree.
That poll
also found that over 60 percent polled across party lines said paying
lower rates is not as important as knowing the insurance company has
the assets to pay out claims.
Currently, the state-run Citizens Insurance has a little more than 1 million customers.
Already,
Crist signed into law a bill that allows Citizens to gradually raise
its rates, by a maximum of 10 percent a year for individual
policyholders.
The goal is to reduce Florida’s hurricane exposure
and economic risk by boosting cash assets and decrease financial
liability in Florida’s Hurricane Catastrophe Fund. The fund is roughly
$13 billion short of what would be needed to cover devastating property
damage.
Citizens rates have been frozen since 2007. Under the law, rate hikes would not take effect until next year.
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