Crist signs 'homeowners' bill of rights'
Article Courtesy of The Sun Sentinel
Published May 29, 2008
Charlie Crist signed into law Wednesday beefed-up penalties for insurers
that violate state regulations and an extended freeze on Citizens
Property Insurance Corp.'s rates.
The sweeping property insurance bill, touted as a "homeowners' bill
of rights," was made up of about 25 parts. The governor approved all
but one: a provision providing loans to small insurers.
"The bill contains many important consumer protections that will help
keep insurance costs more affordable," he wrote in signing the bill.
Crist's support for the legislation comes as no surprise: He has called
for lowering insurance rates and holding insurers accountable since he was
elected in 2006. Late last year, Crist recruited a team of attorneys to
investigate whether the state should sue insurers over certain rate hikes.
What surprised some observers is that Crist vetoed the only part of the
bill that many opponents liked: expanding a program that provides small
insurers with loans in exchange for the insurers taking policies from
state-backed Citizens. Crist said he likes the program because it helped
shift about 200,000 Citizens policies to private insurers. But he doesn't
like that the additional $250 million sought for the program would come
from Citizens, which may already struggle to pay claims if there is major
"The citizens of Florida are already feeling the heavy weight of
property insurance and property tax burdens. I do not support risking an
additional financial hardship," Crist wrote.
Sam Miller, executive vice president of the Florida Insurance Council,
said he hopes the program is expanded next year. "Given its dramatic
success, it's unfortunate that ... it's not going to be fully recharged
right away," Miller said.
The bill Crist signed Wednesday:
•Extends a provision allowing regulators to block insurers'
rate hikes before they take effect.
•Prolongs a freeze on Citizens Property Insurance Corp.'s rates
for one year, to January 2010.
•Doubles maximum fines for insurers that violate state law.
•Prohibits insurers from using arbitration panels when there's
a disagreement with state insurance officials over rates. Florida was one
of only a few states that allowed the use of the panels, which often
approved rate hikes after regulators rejected them. It appeared some
insurers asked for rates they knew regulators would reject just so they
could have arbitrators decide, said Sen. Jeff Atwater, who co-wrote the
•Requires insurers to use state-approved methods to predict the
risk of hurricanes, a key factor in setting rates.
•Requires insurers to notify policy holders 180 days before
dropping them and to pay undisputed claims within 90 days of deciding the
amount of the payment. Atwater, R- North Palm Beach, said consumers
complained that insurers were pressuring them to either accept a low-end
estimate of a claim or wait months or years for an answer back.
"Now consumers can say, 'I disagree with [the amount] but I'll take
the undisputed portion so we can at least get some repairs done, get some
temporary housing, begin work on a couple of rooms in the house. You can't
hold out on me and wait for me to ultimately crack under pressure,'"
Consumer advocates and regulators said they were delighted.
"It will protect consumers from unnecessary and unsupported property
insurance rate increases and more specifically, it will stop insurance
companies from bypassing the Office of Insurance Regulations and
increasing rates," said Office spokesman Ed Domansky.
Insurance industry representatives had harsh words for the new law, but
said it ended up better than it started.
Bob Lotane, spokesman for the Florida Association of Insurance and
Financial Advisors, said that freezing Citizens' rates was among the
disappointments: It means all Florida homeowners pay more if hurricanes
strike and put the insurer in the red. All Florida homeowners help pay
Citizens deficits through fees on their policies.
"If you're a customer of Citizens, you've got to be pleased,"
Lotane said. "But for everyone else ... we'll just have to keep
hoping for more hurricane-free years."