Crist signs revamped insurance package into law
May 29, 2008
The Gainesville Sun–May 28, 2008
By BRENT KALLESTAD Associated Press Writer
TALLAHASSEE, Fla. – Gov. Charlie Crist signed new property insurance legislation Wednesday that extends a rate freeze for about 1.2 million customers of state-backed Citizens Insurance, while vetoing a portion that critics say puts more pressure on residents if a major hurricane strikes.
Crist said he vetoed part of the bill (SB 2860), which would have provided $250 million in incentives for private insurers willing to get into Florida’s dicey homeowners’ market, because he considered Citizens an "inappropriate" funding source.
Crist and state regulators have battled with private insurers, most notably Allstate, for months over rate increase requests.
The bill fixes some glitches in the insurance measure passed in a January 2007 special session, but does little to take the risk off Florida citizens if a major hurricane strikes a heavily populated area.
The bill gives the state more authority over private companies, leaving politicians with their fingers crossed that no big hurricanes come ashore in a populated area this summer.
"They ignored the real crisis," said Sam Miller, executive vice president of the Florida Insurance Council, an industry group. "The real crisis is can the CAT fund deliver if we have a major hurricane and can Citizens timely pay its claims? We don’t know that."
The new law also boosts the maximum price of a home that can be covered by citizens from $1 million to $2 million.
And that troubles the state’s chief financial officer, Alex Sink, who feels the Legislature missed an opportunity to reduce the state’s liability.
"The Legislature chose to increase the risk," Sink’s spokeswoman, Tara Klimek, said Wednesday. "We didn’t take this opportunity to reduce the risk of assessments that Floridians could have."
Lawmakers ignored Sink’s push to trim $3 billion from the state’s $28 billion exposure in the Florida Hurricane Catastrophe Fund, known as the CAT fund.
Residents with car insurance or homeowner policies would be assessed if a catastrophic storm hit Florida and the state was unable to meet its financial obligations.
Floridians who own cars, homes, boats and businesses are already being assessed – albeit small amounts in most cases – for costs the state was unable to absorb following eight hurricanes in 2004 and 2005.
The bill also doubles maximum fines for insurers that violate state law and abolishes arbitration panels, making it more difficult for insurers to hike rates after being denied the increases by state regulators.
Ed Domansky, spokesman for Insurance Commissioner Kevin McCarty said the bill "will protect Florida consumers from unnecessary and unsupported property insurance rate increases."