In a statement received by Historic City News from St. Augustine Representative William Proctor today, Proctor said an idea that was brought to him by a retired National Guard helicopter pilot failed to receive the Governor’s approval.
USAA was shedding its policies at the time after being denied a rate increase. Apparently, the pilot wanted to retain his homeowner’s insurance with USAA, even at a higher rate, but he was notified that he was being cancelled.
Following weeks of intense lobbying, Gov. Charlie Crist on Wednesday vetoed a measure that would have allowed Florida’s largest property insurers to charge higher rates without state regulatory approval.
Saying HB 1171 would promote cherry-picking and hurt attempts to rebuild the state’s property insurance market, Crist vetoed the measure backed by large insurers and business groups that argued it would provide consumers with greater choice.
But Crist said the bill would penalize domestic companies that have taken nearly 400,000 policies out of Citizens Property Insurance Corp, the state-backed company that has become Florida’s largest property insurer.
“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,” Crist wrote. “These select property insurance companies will be able to cherry-pick, or sell only to profitable policyholder risks…”
The bill would allow well-capitalized companies to raise premiums without needing the approval of the Office of Insurance Regulation. The bill was promoted, in part, as a possible way to blunt the impact of the agency’s decision in January to deny State Farm Insurance’s request for a 47-percent rate increase. The company soon after announced it was leaving the state.
Crist’s action Monday brought immediate response from Sen. Mike Bennett, R-Bradenton, and Rep. Bill Proctor, R-St. Augustine, who sponsored the bill in their respective chambers.
“Gov. Crist was clearly within his constitutional authority to veto the bill, and we respect that authority,” the lawmakers said in a joint statement. “However, the Legislature has constitutional authority too, and we are examining and exploring all of our options.”
Florida Insurance Commissioner Kevin McCarty had urged Crist to veto the bill, saying that 40 new companies – with $4 billion in capital – have come into the state, a sentiment Crist echoed in his veto message: “Florida has added … a significant amount of new capital since 2006,” the governor wrote.
Just a few hours before Crist announced his veto, Proctor questioned just how much capital has been raised and by whom. He has been trying to get a list of those 40 companies but had been unsuccessful until Wednesday, when supporters of the bill began circulating what they said was the list of companies McCarty and Crist were referencing.
The list appears to show that most of the new companies are surplus lines insurers, which typically cover nearly uninsurable or particularly risky property. Such insurers charge higher rates and are already outside the state regulatory structure.
“That list, if that’s the $4.1 billion he’s talking about, about $3.8 billion of that is surplus lines,” Proctor said. “Surplus lines (insurance) is unregulated.”
Introduced late in the 2009 Legislative Session, the measure had been pushed by a coalition of Republicans, and was backed by House Speaker Larry Cretul.
“Gov. Crist’s veto of (HB 1171) is a disappointment,” Cretul, R-Ocala, said in a statement. “Florida has demonstrated that over-regulating the insurance industry can actually make things worse for consumers–not better. It seems reasonable to give homeowners as many choices as possible as they seek to insure their property.”
Proctor also emphasized Wednesday that the bill had been wrongly pegged on State Farm, which is one of the companies that likely would have benefited if the measure had been signed. The company did not immediately respond to a request for comment.
The measure is likely to return as lawmakers continue to debate how to get the state’s insurance market back in private hands and reduce Florida’s exposure.
“It will behoove us to continue to try to figure out a way to attract insurers into the Florida marketplace,” said Sen. Garrett Richter, R-Naples and chairman of the Senate Banking and Insurance Committee.
Bennett was even more emphatic. Given that such groups as the Black Caucus, the Hispanic Chamber of Commerce, Associated Industries of Florida and the Florida Chamber of Commerce approved the measure, Bennett said a veto override was one of a number of possible responses.
“This would not be an action against the governor,” said Bennett, who has asked for McCarty’s resignation. “It’s an action against his staff that have given him misinformation.”
McCarty wasn’t available for comment but his spokesman, Ed Domansky, praised Crist’s action.
“Commissioner McCarty knows that Gov. Crist carefully considered this bill and has done what is best for the people of Florida,” Domansky said.
By MICHAEL PELTIER AND DAVID ROYSE