Governor Charlie Crist has made it official.  He has vetoed the omnibus property insurance bill, SB 2044, despite the legislation’s major provisions that address many of the cost drivers identified by Insurance Commissioner Kevin McCarty.

How the Governor would act on the bill was anyone’s guess in the weeks following the Legislature’s passage of the bill.  Over the weekend, however, as the Tuesday deadline for acting on the bill approached, statements the Governor made at a Memorial Day event gave way to speculation that he was heavily leaning toward a veto.  His decision to veto was not released until after 8:00 p.m.  (Click here for the veto letter: http://capitalsoup.com/wp-content/uploads/2010/06/SB-2044-Veto.pdf)

In his veto message the Governor said: “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.  During these very difficult economic times, Florida’s consumers should not have to be concerned with an additional premium increase to their policy.”

While addressing cost drivers identified last fall by Commissioner McCarty, including an expedited rate review process for companies attempting to recoup reinsurance costs; a three-year limit on filing hurricane claims; stronger regulation of public adjusters; and reform of replacement cost coverage to ensure that roofs and damaged walls are repaired and minimize the incentives for fraud; the bill would have also extended the ban on file and use.  Without the extension, the ban is now repealed as of January 1, 2011.

The bill had the support of Commissioner McCarty, Chief Financial Officer Alex Sink and Consumer Advocate Sean Shaw and included provisions they sought, including:
  • Requirement that new property insurers have $15 million in capital, up from $4 million, with a 10-year grace period for existing companies.
  • Limitation on fraud by reining in public adjusters and putting strict new limits on inspectors who verify policy mitigation discounts.
  • The upgrading of an agency website that gives consumers the ability to compare rate prices and company complaint records.
Newspaper reports over the Memorial Day weekend certainly could be interpreted as playing into the Governor’s acknowledged displeasure with the industry.  The Sarasota Herald noted how insurance lobbyists worked with Commissioner McCarty and the Office of Insurance Regulation in drafting the final language of the property bill.