Crist vetoes 'State Farm' insurance bill
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 that State Farm Florida will push ahead with plans to stop writing policies for property owners here — an exit that insurance experts warn could devastate 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 HB 1171 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 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 that found that 60 percent of Florida voters thought Crist should sign HB 1171, while 24 percent thought he should not.
That poll also found that more than 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. State-run Citizens Insurance has about 1 million customers.
Already, Crist signed into law a bill that allows Citizens to raise rates up to 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.
By Shannon Colavecchio, Times Staff Writer