In a forceful rebuke to insurance companies, Gov. Charlie Crist cajoled fellow Cabinet members into approving a rule Tuesday that will prevent property insurers from canceling Florida policies for much of the rest of this year.
The emergency rule will freeze insurance rates and prevent cancellations through the end of the hurricane season. Crist overcame concerns expressed by Chief Financial Officer Alex Sink and Agriculture Commissioner Charles Bronson that the rule goes too far and may make Florida too inhospitable to private insurers.
Lawmakers last week passed a wide-ranging bill that is expected to result in lower rates. This week, Crist proposed the rule that would prevent companies from filing for new rate increases without taking into account changes in the bill, some of which won’t be in effect until this summer.
But another part of the rule also prevents companies from dropping customers, in effect saying that they can’t respond to the new requirements that are expected to lower rates by simply canceling policies.
While that part of the rule is only in effect until May, companies then won’t be able to cancel policies because of another part of the new law that prevents them from dropping customers close to hurricane season, which starts June 1 and ends Nov. 30.
Crist said he expected that without the rule, insurers would try to find a way to get around the new law any way they could.
“We’ve seen over and over again where this industry will take advantage of people,” the Republican governor said.
Sink, a Democrat, and Bronson, a Republican, both expressed concerns that the move would further dissuade private insurance companies from considering Florida a place where they want to do business.
But they eventually went along with Crist and Attorney General Bill McCollum, over the objection of insurance industry officials.
Guy Marvin, president of the Florida Insurance Council, which represents several large insurers, said the move would have a “drastically negative impact on the financial statements of some of our members.”
Mark Delegal, a lobbyist for Nationwide Insurance and State Farm Florida Insurance Co., acknowledged that “it is not a pretty scene for many Floridians,” because of high rates. But he argued that the two companies he represents are trying hard to stay in the state, and yet are being punished with rules like that approved Tuesday.
Crist would have none of the insurance companies’ complaints.
Floridians have seen “rate increase after rate increase after rate increase and they are sick and tired of it and they can’t afford it,” Crist told Delegal.
Crist told his fellow Cabinet members that the Legislature had “the backbone” to stand up to the insurance industry and that now it was time for the Cabinet to do the same.
“Would you not expect (insurers) to tell you that it is doom and gloom?” Crist asked.