TALLAHASSEE — Resisting pressure from a chorus of large and politically influential industry groups, Gov. Charlie Crist on Wednesday vetoed legislation aimed at enticing large property insurance companies to write policies in Florida.
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 be devastating to hurricane-prone Florida.
Critics of HB 1171 lauded the veto as a move that keeps property insurance affordable for Floridians.
In a letter explaining his decision, Crist cited his concerns about Floridians being faced with higher insurance costs in challenging economic times.
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 withdraw from the insurance market here within two years. The company insures more than 1 million Florida properties.
By relaxing rate regulation, lawmakers hoped to lure State Farm and other large companies back to Florida.
Bill sponsors Rep. Bill Proctor, R-St. Augustine, and Sen. Mike Bennett, R-Bradenton, issued a statement making clear their "disappointment" with the veto — and hinting at the possibility of a veto override, which would require a two-thirds vote of both chambers of the Legislature.
When the bill passed this session, 85 percent of lawmakers voted yes.
State Farm officials never explicitly promised to stay if HB 1171 became 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.
After the veto, State Farm Florida spokesman Chris Neal said the company is still negotiating its withdrawal plan with regulators, but "We have no choice but to proceed. We're disappointed, like the majority of the Legislature and hundreds of thousands of consumers."
Crist's veto was not surprising, given his outspoken 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 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.
Florida Chamber of Commerce spokesman Dan Krassner said the veto was expected, and chamber president Mark Wilson will "work closely with the governor" to craft legislation for next session. "We have to fix the insurance situation," Krassner said. "We're just hoping we don't have a hurricane this summer."
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 head of the insurance project at the Competitive Enterprise Institute, a Washington think tank, quickly attacked Crist's decision. "Charlie Crist has declared war on Florida homeowners. He is taking away choices, taking away the market, and taking away freedom," said Eli Lehrer, director of CEI's Center for Risk, Regulation and Markets. "He is working against Floridians' interests. This is a sad day for the state."
The Florida chamber recently released a poll that found 60 percent of Florida voters believe Crist should sign HB 1171, while 24 percent disagreed. That poll also found that over 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.
Currently, the state-run Citizens Insurance has a little more than 1 million customers.
Crist has already signed into law a bill that allows Citizens to gradually raise its rates, by a maximum of 10 percent a year for individual policyholders.
The goal is to reduce Florida's hurricane exposure and economic risk by boosting cash assets and decreasing 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.
Meanwhile, a number of smaller companies have entered Florida in recent years. Some insurance experts and lawmakers worry they do not have the assets or experience to cover the kind of losses that would come from a catastrophic hurricane.
Shannon Colavecchio can be reached at [email protected] or (850) 224-7263.