vetoes bill allowing certain property insurance rate hikes
Article Courtesy of The Sun Sentinel
Published June 2, 2010
Gov. Charlie Crist late Tuesday vetoed a broad property insurance bill that would have made it easier for insurers to raise rates and reduce claims costs.
Insurance industry officials said the bill was needed to strengthen property insurers battered in recent years by higher costs for non-catastrophe claims and higher discounts to policyholders who fortify their homes against hurricanes. But Crist told the Sun Sentinel last month he was leaning toward vetoing it because of the potential impact on customers' rates.
"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 late Tuesday. "During these very difficult economic times, Florida consumers should not have to be concerned with an additional premium increase to their policy."
Crist championed measures a few years ago to expand state insurance programs to help lower premiums. He said some insurers "want to charge you every single year as though [a major hurricane] hits every year."
"The approach that we have taken and in order to be able to reduce your rates is say, 'We won't do that to you unless that happens,' " he said. "They want to do that to you regardless if it happens because they want more money in their account."
Among other things, the bill would have:
Allowed insurers to raise rates if they show the "mitigation" discounts were too high and to pass to customers the costs of advertising and agent commissions without interference from regulators.
Expanded a provision from last year allowing insurers to raise premiums by up to 10 percent a year for certain back up coverage costs without full oversight from regulators. The bill this year would have allowed inflation and other costs to be included in the provision.
Limited the time policyholders have to file a windstorm claims to three years after a hurricane, down from five years, and allowed insurers to withhold part of most claims until the homeowner has a contract to make repairs and "as the work is performed."
Florida Insurance Commissioner Kevin McCarty told Crist in a letter last month that he supports the bill because it would have helped lower claims costs for insurers; required home insurers to have $15 million in claims-paying reserves by mid-2020 — up from $4 million now; extended a provision requiring insurers to have approval from regulators for rate hikes before implementing them, instead of potentially providing refunds later.