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Important Balance of Consumer
and Industry Provisions Lost in Veto
Florida Insurance Council Statement on Veto of SB 2044

A statement by Guy Marvin, President, Florida Insurance Council
Contact: Florida Insurance Council
Sam Miller, Executive Vice President, (850) 386-6668, ext. 223 or
Gary Landry, Vice President, (850) 386-6668, ext. 234

The Florida Insurance Council and its member companies worked with elected leaders and stakeholders in the months leading to and throughout the 2010 Legislative Session to craft legislation contained in SB 2044, the major property insurance package of the 2010 session. As finally crafted, this package struck a good balance of benefits for consumers, state regulators, Citizens Property Insurance Corporation, the Florida Hurricane Catastrophe Fund and the property insurance community.

It is unfortunate Governor Crist was unable to accept the bill. It was supported by the other members of the Florida Cabinet—Chief Financial Officer Alex Sink, Attorney General Bill McCollum, and Agriculture & Consumer Affairs Commissioner Charles Bronson. These officials, who along with Crist serve as the Financial Services Commission and oversee the Florida Office of Insurance Regulation, determined the package was  good public policy for the State of Florida.  The bill was also supported by Florida OIR and Insurance Commissioner Kevin McCarty, the Cat Fund Advisory Council, Citizens Property, Insurance Consumer Advocate Sean Shaw and Walter Dartland, one of Florida’s best known consumer advocates.

In a great democracy, honorable people are free to disagree and the governor was convinced a veto was the step he had to take.

Still, it is important to note that the package was developed to attack the cost drivers which have prevented insurers from building significant new surplus even though Florida has not had a hurricane landfall for four years. These cost drivers forced Florida OIR to approve rate increases for most insurers in recent months after a three-year rate freeze. Until these critical problems in the property insurance marketplace are resolved, rates will continue to rise and insolvencies of insurers may continue.

The now vetoed package included an OIR-supported requirement that insurance claim proceeds be used to repair roofs and other structural damage from a hurricane and that money from a sinkhole claim go to repair and preserve the structure so there is not additional damage and new insurance claims in the future.

It provided a reasonable restriction on the filing of hurricane claims and new public adjuster regulations that would have prevented the recent $700 million bond issue by the Florida Hurricane Catastrophe Fund and the January 1, 2011, increase from 1 percent to 1.3 percent in the Cat Fund assessment paid by all homeowners in Florida, all businesses and all private passenger and commercial auto policyholders.

Florida OIR requested an increase in minimum surplus for insurance companies from $5 million to $15 million and the legislation included that. OIR sought additional authority to examine the books of managing general agents utilized by many insurers and the bill provided that.

Citizens Property Insurance Corporation requested provisions, including a change in the name of the High Risk Account to the Coastal Account to allow it to seek better terms when it issues bonds. The veto blocks this Citizens-requested reform.

The Council respectfully submits that the veto reverses significant policy decisions which  would have helped to stabilize an unstable market.  The insurance community pledges to continue to work with all of our elected leaders and other stakeholders in the weeks and months ahead to craft public policy that will ultimately bring needed reforms and which can become law.

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