In his veto statement, Gov. Crist said he was worried the expedited rate filing procedure would "make it easier to raise Floridians' premiums."

"During these very difficult economic times, Florida's consumers should not have to be concerned with an additional premium increase to their policy," he said.

In addition, he said the change in mitigation discounts might mean that "responsible Floridians who have already made investments to harden their homes could be unfairly penalized."

The Property Casualty Insurers Association of America was "disappointed" by the veto, warning that "without the bill, we continue to confront the problem of a huge and growing financial risk that Floridians face from the next storm."

"A good-faith effort was made to pass a bill that tackled those problems," said Florida Insurance Council Executive Vice President Sam Miller. "Unfortunately, the governor disagreed. There's just a gentlemen's disagreement."

Senate President Jeff Atwater, R-North Palm Beach–and a candidate for the post of chief financial officer–blasted Gov. Crist's veto. "He yet again has found a way to mischaracterize the substance of legislation to advance his own political career," Sen. Atwater said, charging that the governor is trying to act as if he "came to bat for the little guy. That clearly is not what the case is here."

The bill's sponsor, Sen. Garrett Richter, R-Naples, agreed that "the only way I could rationalize a veto is pure politics."

Scott Johnson, executive vice president of the Florida Association of Insurance Agents, expressed concern about the veto's effects: "It won't be a very pretty marketplace…There will be a greater influx of policies into Citizens, and there will be more companies becoming insolvent." (He was referring to Citizens Property Insurance Corp., the not-for-profit, tax-exempt government entity providing property insurance to homeowners and businesses in the state unable to get coverage.)

Neil Alldredge, senior vice president of state and policy affairs for the National Association of Mutual Insurance Companies, said that Gov. Crist "just doesn't get it."

"Florida needs to create a business climate and competition-based pricing in which the free market is alive and well for the purchase of insurance," he said. "Such a market helps build a clear understanding of the true cost of risk, which would promote wiser decisions with a long-term view regarding land-use planning and resource management. Only then will consumers have plentiful and sustainable choices for coverage."

Instead, according to Mr. Alldredge, "the governor decided to begin hurricane season by vetoing…legislation that would have continued the slow but steady progress that had been occurring for insurance consumers and companies in Florida."

Mr. Alldredge added that "while the bill did not contain provisions that would have allowed insurers to appropriately and accurately match rate to risk and encourage competition that can only benefit insurance customers, NAMIC members and their policyholders would have benefitted from the provisions that addressed cost drivers, such as public adjuster expenses, replacement cost claims, reinsurance premiums and inappropriate mitigation discounts."

He said "the governor's decision to veto this bill is nothing more than pandering to voters as he vies for a Senate seat, but those who understand the issue and the importance of this bill will know exactly why he made the decision he did."

SB 2176 SIGNED

In an action garnering much less attention, Gov. Crist signed into law SB 2176, which allows an insurer to implement rates for most forms of commercial insurance without the approval of the Office of Insurance Regulation, provided that the insurer notifies the regulator of any rate changes no later than 30 days after the effective date of the change.

The regulator may subsequently review the rates to determine whether they are "excessive, inadequate or unfairly discriminatory."

Cecil Pearce, vice president of state affairs, Southeast Region, for the American Insurance Association, said "legislators recognized the need for balanced regulation that will further increase competition and promote a healthier commercial insurance market to the benefit of Florida's businesses. Insurers will be better positioned to respond to the state's evolving commercial insurance needs in the years ahead."

The bill, which became law upon the governor's signature, also has workers' compensation implications. According to the bill's summary, the new law:

o "Provides for interpretation of provisions relating to workers' compensation benefits for certain services performed by off-duty deputy sheriffs.

o "Prohibits an association, fund or pool created for the purpose of forming or managing a risk management mechanism or providing self-insurance for a public entity from requiring its members to give more than 60 days' notice of the member's intention to withdraw from the association, fund, or pool, etc."

Joan Collier is Editor in Chief of Florida Underwriter, part of Summit Business Media's P&C Magazine Group, which includes National Underwriter. She may be reached at [email protected].