Make us your home page

Crist cites rates, critics cite politics, as he vetoes property insurance bill

TALLAHASSEE — On the first day of the 2010 hurricane season, Gov. Charlie Crist vetoed an expansive property insurance bill, citing concerns about making it easier to increase rates for policyholders.

"During these very difficult economic times, Florida's consumers should not have to be concerned with an additional premium increase to their policy," Crist wrote in his veto message, released two hours before the midnight decision deadline.

Crist's move reaffirmed his populist posture against the insurance industry, but went against the advice of the state's top insurance regulator and other advocates who argued the legislation would help stabilize the market ahead of what is expected to be an active storm season.

The decision vexed the bill sponsor, Sen. Garrett Richter, R-Naples, who said the Governor's Office worked closely with the lawmakers and the industry to craft the legislation.

"The only way I could rationalize a veto is pure politics," said Richter, who suggested similarities to the uproar concerning Senate Bill 6, a hotly contested education bill that Crist's administration supported earlier this year before he killed it.

The industry-backed bill (SB 2044) included a kaleidoscope of measures designed to tweak the state's troubled insurance market, with supporters and critics finding components to like and dislike.

Even though Crist vetoed the bill to protect from higher rates, his action voids a little-noticed provision tucked inside the 110-page bill to extend the ban on "use and file" rate filings, a system that upends the existing regulatory scheme.

Under current law, an insurance company requests a rate hike from the Office of Insurance Regulation, which has the authority to approve or reject it before it takes effect. But with the veto, effective Jan. 1, insurers can charge consumers higher rates for months, if not years, before state regulators decide whether they are appropriate.

The veto came as Florida's insurers cast a wary eye toward the tropics, given the state's exposure to storms and precarious insurance market.

Despite four hurricane-free seasons in a row, the majority of insurers say they lost money and several startup insurers went out of business. To limit future failures, the legislation would have required new property insurers to keep larger capital reserves to pay claims, moving the minimum from $5 million to $15 million and giving existing companies a grace period.

Another reason for higher rates, according to state regulators and the industry, are public adjusters who helped homeowners reopen claims from the 2004 and 2005 hurricane seasons, and fraud in a program that gave policyholders discounts for hardening homes against storm damage.

"A good-faith effort was made to pass a bill that tackled those problems," said Sam Miller of the Florida Insurance Council, a trade group representing about 200 insurance companies. "Unfortunately, the governor disagreed. There's just a gentlemen's disagreement."

Critics contend limiting claims to three years after a storm and cutting mitigation discounts only hurt consumers.

Crist expressed concern about the possibility of reducing incentives to strengthen homes.

"Responsible Floridians who have already made investments to harden the homes could be unfairly penalized," he wrote.

On the upside, Citizens Property Insurance, the state-run insurer, has become more financially viable after mandated rate increases and calm storm seasons. The insurer is sitting on a $4 billion surplus and has ability to pay more than $14 billion in claims heading into the summer.

Likewise, the Florida Hurricane Catastrophe Fund, which provides an added layer of coverage for insurers after a major hurricane, is considered fully financed. But the market still holds dangers, particularly as private insurers and failed companies shed policies to Citizens, which is adding at least 70,000 policies to its current 1 million as the hurricane season gets under way.

Everyone in the state is tied in to the fate of Citizens because all insurance policies can be assessed to pay for storm damage that Citizens can't cover.

Bob Ritchie, president and chief executive of American Integrity Insurance in Tampa, said Crist's decision to veto didn't surprise him, even with the support of the state's insurance consumer advocate. He linked it to the election season and Crist's bid for the U.S. Senate.

"He's looking for a short-term political gain," he said, "for the sake of what's going to be long-term damage."

John Frank can be reached at or (850) 224-7263.

Bill's provisions

The property insurance bill vetoed by Gov. Charlie Crist included provisions to:

• Let insurers to more easily hike rates up to 10 percent each year to cover reinsurance and inflation costs.

• Allow companies to withhold a full claims payment until homeowners repair damage, even for those with replacement cost value policies.

• Restrict hurricane claims to three years, instead of five, to limit the ability of public adjusters to reopen claims.

• Require new insurers to have $15 million in capital, up from $5 million, with a 10-year grace period for existing companies.

• Offer fewer discounts to policyholders who strengthen homes against storms and charge fees to those with inferior protection.

• Give regulators limited ability to review finances of an insurer's related companies, tightening but not closing a loophole that allows companies to mask profits.

Crist cites rates, critics cite politics, as he vetoes property insurance bill 06/01/10 [Last modified: Wednesday, June 2, 2010 7:25am]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. Report slams Pinellas construction licensing agency and leaders

    Local Government

    LARGO — The Pinellas County Construction Licensing Board mismanaged its finances, lacked accountability and disregarded its own rules, according to a scathing report released Wednesday by the county's inspector general.

    Rodney Fischer, the executive director of the Pinellas County Construction Licensing Board, resigned in January.  [SCOTT KEELER   |   Times]
  2. A meatless burger that tastes like meat? Ciccio Restaurants will serve the Impossible Burger.

    Food & Dining

    TAMPA — The most red-hot hamburger in the nation right now contains no meat.

    Ciccio executive chef Luis Flores prepares an Impossible Burger Wednesday at the Epicurean Hotel Food Theatre in Tampa.
  3. Construction starts on USF medical school, the first piece of Tampa's Water Street project


    TAMPA — Dozens of workers in hard hats and boots were busy at work at the corner of South Meridian Avenue and Channelside Drive Wednesday morning, signaling the start of construction on the University of South Florida's new Morsani College of Medicine and Heart Institute.

    Construction is underway for the new Morsani College of Medicine and USF Health Heart Institute in downtown Tampa. This view is from atop Amalie Arena, where local officials gathered Wednesday to celebrate the first piece of what will be the new Water Street District. The USF building is expected to open in late 2019. [ALESSANDRA DA PRA  |   Times]
  4. Tampa Bay among top 25 metro areas with fastest growing economies

    Economic Development

    Tampa Bay had the 24th fastest growing economy among 382 metro areas in the country for 2016. According to an analysis by the U.S. Bureau of Economic Analysis, Tampa Bay's gross domestic product, or GDP, increased 4.2 percent from 2015 to 2016 to hit $126.2 billion.

    Tampa Bay had the 24th fastest growing economy in the country for 2016. Rentals were one of the areas that contributed to Tampa Bay's GDP growth. Pictured is attorney David Eaton in front of his rental home. 
  5. Tampa Bay cools down to more moderate home price increases

    Real Estate

    The increase in home prices throughout much of the Tampa Bay area is definitely slowing from the torrid rate a year ago.

    This home close to Bayshore Boulevard in Tampa sold for $3.055 million in August, making it Hillsborough County's top sale of the month. [Courtesy of Bredt Cobitz]