'People's' governor hurts flock with property insurance veto

By vetoing Senate Bill 2044, Gov. Charlie Crist not only secured his place as one of the least consistent politicians in Florida's history, he established himself as one of the most selfish.

With a single pen stroke, he succeeded in placing Florida's home insurance market - the one he created and populated with small domestic carriers - on the verge of collapse. Ironically, he did this on June 1, the opening day of what is predicted to be the most active hurricane season since the 2004-05 storms made shambles of our state, a period that puts nearly 6 million homeowners at risk.

Senate Bill 2044 was heaped with consumer protections. It blocked re-enactment of the "use and file" law, which allows insurance companies to raise rates without approval by the Office of Insurance Regulation. It increased surplus and capital requirements for shaky insurers. It created a website to help consumers find the lowest price and the best deal. It maintained OIR oversight of rates while enacting provisions that would forestall pending insolvencies and lower underlying costs.

That's why Insurance Commissioner Kevin McCarty, consumer advocate Walter Dartland, the Florida Chamber of Commerce, TaxWatch, Associated Industries of Florida, a majority of lawmakers and numerous newspaper editorials urged Crist to sign SB 2044 and keep politics out of the debate.

The legislation placed restrictions on the ability of carriers to channel needed surplus to investors instead of retaining it for payment of future claims. When told of this provision, Crist said during a Cabinet meeting, "That's a bill I'd like to sign."

Instead, when pressed by trial lawyers and public adjusters to veto something that might impact their profits, he caved and did their bidding. The results won't be pretty - even without a hurricane.

Five years without a hurricane would normally allow companies to build up a surplus, which provides a cushion to pay future claims and drives prices down by reducing the need to depend on unregulated reinsurers. Instead, under the system that Crist's veto preserves, the average loss per policy, without hurricanes, has risen 65 percent.

With his "just make it to November" approach, Crist squandered a five-year opportunity for consumers to avoid future rate increases, and he still hasn't kept rates down.

Last year under Crist's scheme more than 100 rate increases were necessary, many over 20 percent. The state's largest private insurer had to be granted a 14 percent rate increase on every one of its policies. When coupled with discounts the company removed, the average State Farm customer's premium rose 42 percent. Again, with no storms.

Even with all the rate increases, Crist's plan hurt hundreds of thousands of consumers with an alarmingly high number of company insolvencies. While assessments and premiums rocketed up, five carriers had to be shut down.

And it's getting worse. In the first quarter of 2010, only nine of Florida's top 47 domestic writers showed an underwriting profit. The rest lost another $250 million in potential surplus to pay claims. This is partially why the state's insurer of last resort, Citizens, is now receiving 45,000 new applications every 30 days. Just after we go to the polls, it's possible Citizens may be the largest residential insurer in America with 1,750,000 homes insured and more than half a trillion in exposure, subsidized by taxpayers and voters.

Without the reforms of SB 2044 we can all expect more of the same - rate increases, assessments and insolvencies. Sadly, Crist put the interests of trial lawyers and public adjusters over the people of Florida he pretends to serve.