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Florida Gov. Charlie Crist announced he would veto legislation that would allow specified insurers to use rates for homeowners insurance not subject to approval from the Office of Insurance Regulation (OIR).
The bill, HB 447, has not passed the legislature yet; the legislative session has not yet begun, but Sterling Ivey, press secretary for Gov. Crist, said that while the session hasn’t started, the governor “is on the record as saying he will not support legislation that increases home insurance premiums.”
The governor made his latest remarks about the bill at an Associated Press Florida event, according to a statement put out by consumer groups.
The consumer groups reacted favorably to the news. Consumer Federation of America’s (CFA) director of insurance, Bob Hunter, said in a statement, “It is outrageous to claim that this bill falsely promises ‘consumer choice,’ when its purpose is to let insurance companies charge whatever high rate they want with no consumer protections in a market with virtually no competition. The bill is an insurance industry wolf wrapped in consumer-choice-like lamb clothing.”
Birny Birnbaum, executive director for the Center of Economic Justice (CEJ), told NU Online that the bill is similar to legislation that passed the legislature last year but was vetoed by Gov. Crist.
That bill would have allowed homeowners insurers to charge rates not approved by the OIR if they met certain surplus requirements.
Mr. Birnbaum called this year’s bill a “little more far-reaching,” as the capital level limits in last year’s bill do not apply.
“It’s unclear what you’re trying to accomplish with a deregulation bill,” Mr. Birnbaum said.
He noted that the Florida market has shown that it is not competitive, and so competition and market forces will not lead to favorable prices for consumers. Regulatory oversight, he stated, is the only thing protecting consumers from excessive rates.
Florida is faced with challenges, Mr. Birnbaum said, such as the cost of reinsurance and volatility in the insurance markets—where players are “gung-ho one year,” but apprehensive after a storm hits.
Mr. Birnbaum said the legislature has taken some meaningful steps in the area of loss mitigation. “You can’t stop the wind from blowing,” he said, but retrofitting structures and implementing building codes can help minimize damage from storms.
Sam Miller, Florida Insurance Council executive vice president, said given the governor’s veto last year, his statement was not unexpected, but noted Mr. Crist had promised his veto “based on what I know now.” This “left the door open slightly,” said Mr. Miller.
Even though they have experienced no recent hurricane claims, “lots of insurance companies are having losses and seeing surplus dwindle. The inability to get the premium they need is one of the factors,” he noted. Mr. Miller said the legislature would be looking at this problem.