THE NEWS SERVICE OF FLORIDA: Crist Vetoes Property Insurance Legislation

 

The News Service of Florida issued the article below on Florida Governor Charlie Crist’s veto of SB 2044 today, June 1, 2010. 

In his transmittal letter, which is attached for review, the Governor cited SB 2044’s potential to expedite rate increases and its “troubling” changes to the application of wind mitigation discounts as his reasons for vetoing the bill.

Should you have any questions or comments, please contact Colodny Fass.

 

CRIST VETOES PROPERTY INSURANCE LEGISLATION

By MICHAEL PELTIER
THE NEWS SERVICE OF FLORIDA

THE CAPITAL, TALLAHASSEE, June 1, 2010…..Calling the measure unfriendly to consumers, Gov. Charlie Crist on Tuesday vetoed legislation backed by the insurance industry that, among other things, things would have allowed property insurance companies to more easily raise rates by up to 10 percent a year without going through the lengthy regulatory process.

Crist’s decision came despite calls from two top state officials to approve the bill (SB 2044) that backers say would have strengthened the state’s property insurance market by requiring more financial backing for new and existing insurers while requiring that most rates be approved before they are put in place, rather than allowing companies to implement new rates and then seek approval later.

The bill, one of seven vetoed Tuesday night by the newly independent governor, would have allowed companies to put in place higher rates to account for inflation and rising reinsurance costs up to 10 percent a year without having to go through the full rate filing process with regulators.

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, Crist said in his veto message. During these very difficult economic times, Florida’s consumers should not have to be concerned with an additional premium increase to their policy.

Additionally, the bill makes troubling changes to the way mitigation discounts are applied, Crist continued. Specifically, responsible Floridians who have already made investments to harden their homes could be unfairly penalized.

Ash Williams, executive director of the State Board of Administration, and Insurance Commissioner Kevin McCarty had both urged Crist in separate letters to sign the measure, saying on the whole it would help stabilize the property insurance market that has been on shaky ground following back-to-back hurricane ravaged seasons beginning in 2004.

But the bill was a major priority for the insurance industry, not simply because of the changes to rate filing procedures. The measure also sought to make it harder for some public adjusters, to help homeowners pursue old claims against insurers. The industry has said the number of reopened claims from as far back as 2005 has caused heavy losses, and that public adjusters are sometimes reopening claims that were rightly rejected long ago.

The Senate sponsor of the measure, Sen. Garrett Richter, R-Naples, called Crists action politically motivated and said the veto would slow efforts to get the states private insurance market back on its feet. Crist is running for the U.S. Senate and opponents have said the veto was simply populist pandering in search of votes.

Based on what the bill does, there is no other reason to veto it other than a political motivation, Richter said.

Crist, however, has always been vocally opposed to anything that raises rates for customers of big service providers, from phone companies and electric utilities to insurers. A couple of years ago, when State Farm, then the state’s largest property insurer, said it wouldn’t be writing new policies here, Crist said essentially, go ahead and leave, though state regulators later worked out a deal to raise State Farm rates some and keep the company in Florida.

The veto was unusual, however, in that Crist ally McCarty was in favor of it. As insurance commissioner McCarty has frequently battled the industry, but this time urged the governor to go along with the measure, which had broad support among insurers.

Speaking before the Cabinet in May, McCarty suggested Crist should sign the bill.

“Some have characterized this as deregulation bill,” McCarty said. “Nothing could be further from the truth. There are provisions in the law that allow for an accelerated review process but all rates would be approved by the agency.”

The bill also contains a number of provisions including allowing insurers to withhold portions of claims until repairs are completed.

The measure also would have continued a law that that required companies to seek rate approval before passing the premium hikes onto consumer. With the veto, property insurance companies can now raise rates on consumers while they are seeking state approval, a procedure known as use and file.

In addition to the insurance measure, Crist also Tuesday vetoed another bill (HB 545) that had been sought by Realtors that repealed a law requiring disclosures of residential property windstorm mitigation ratings to purchasers of homes in certain areas.

Other bills vetoed by Crist Tuesday were a measure (HB 569) allowing yard trash to be deposited in certain landfills which are designed to capture methane gas for energy production, a bill (SB 1004) allowing county commissions to negotiate short term leases – up to 5 years – without a bid process, a measure (HB 1385) related to petroleum contamination site cleanup, legislation (SB 1964) that sought to limit tort claims in some cases for engineers, surveyors and other design professionals, and a bill (HB 7203) related to community development districts.

–END–
6/1/10

Independent and Indispensable

http://www.newsserviceflorida.com

 

 

To unsubscribe from this newsletter, please send an email to bellis@cftlaw.com.