What happened with HB 1171?

1171, the insurance deregulation bill, was passed by an overwhelming majority in the Florida House and Senate, then vetoed by Governor Crist. Why?


I would speculate that because this idea was fairly popular with constituents, many voted for it knowing the Governor would take the heat. The insurance company PR campaign was quite effective, and also, many legislators wanted to be able to say they went along with the insurers (a breakaway group of smaller insurers opposed the bill.) Voting with insurers helps get campaign contributions. But legislators probably knew that the Governor had to veto the measure because it could wreak havoc on his Senate run if rates go through the roof. The safe choice was the veto, and rates stay the same, mostly. So the vote was a freebie for the legislators: Help your contributor, but no impact on your voters. Can't help wondering if some of them were nervous that he might sign it.

The veto override isn’t likely because the Senate President voted against the bill along with a significant group of senators including the minority leader, Sen. Gelber. The Republicans aren’t that thrilled with Charlie, but they aren’t likely to revolt against him either because he is very popular. They can make his life difficult, and 1171 does just that. He has to argue against something that hasn’t actually happened, so its hard for him to make his case. Everyone asks, “Why can’t I have a choice?” and it isn’t an easy answer.

He will probably still win the Senate seat, but it’s a little harder now. Charlie knows that running against the insurance companies has usually been a winner in our state. Look at Bill Nelson, former insurance commissioner. So he isn’t too worried. In the end, everyone is happy but a certain large insurer, and they’re really mad, but they just haven’t played this very well. This is the insurance business. They make a lot of money. They need to deal with the occasional negative outcome.

Governor Vetos 1171

Gov Crist today vetoed HB 1171, the State Farm bailout bill. FCAN and numerous other consumer groups had urged the veto. We thank the Governor for his wise decision.

Had the bill been signed, Florida insurance rates would have skyrocketed and thousands of policyholders would have come the the state run Citizens Property Insurance company.

Now, it remains to be seen whether State Farm will follow through on its threat to leave the state. This blog has always maintained that State Farm is bluffing and that they will find an excuse to stay. My guess would be that they say market conditions have changed and that they will accept a 20% or 30% rate hike from OIR. They will dramatically dump a few policies and then go back to business as usual, namely bullying everyone else.

State Farm's loss will be the gain of smaller companies trying to get into the Florida market. Our insurance market is growing and competition is increasing. That can now continue.