Charlie Crist, Governor of Florida, has vetoed a reform bill that he said will make it too easy for home insurance companies to raise residential premium rates in the state. In a memo sent out by the governor, he stated that he was also concerned about the mitigation discount changes incorporated in the bill.
According to Crist, the mitigation changes will result in unfairly penalizing homeowners who already have exerted efforts to strengthen their houses against hurricanes. He further added that Florida homeowners should not be given additional problems by increasing their policy premiums, particularly with the economy being as difficult as it is.
Kevin McCarty, State Insurance Commissioner, who had expressed support for the bill, has argued that the legislative bill would have ensured solvency among private insurance providers. Bill sponsors have also asserted that it would have diminished legislative pressure on insurers and restore industry competition, which in turn could help stabilize policy rates in the area.
According to Florida insurers, the industry’s loss reached $700 million in 2009 despite the state not suffering from any hurricane during that period. They stated that revenues declined by around 30% in the past three years due to the rate rollback implemented in January 2007 and because of the double discounts for the mitigation of hurricane effects, including the addition of coverage for strapped roofs and shutters. Home insurance companies added that the recession has also not helped the industry.
The housing insurance industry of Florida has been supported by various government agencies like Citizens Insurance for years. Charles Bronson, Agriculture Secretary has expressed concern over the ability of Citizens Insurance to pay claims should a hurricane or a huge storm hit the state. He added that this will affect costs incurred by policy owners since they will be hit by surcharges.
For years, the state has found it difficult to form a resolution on the issue of property insurance. According to industry observers, the problem started when Hurricane Andrew hit the state in 1992, followed by a series of storms during 2004-2005. The hurricane and storm catastrophes that hit the state have resulted in a number of home insurance companies either leaving Florida or reducing their policies.
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