In an editorial, Insurance Bill Needs Improvement, the Miami Herald called on Governor Crist to veto the property insurance bill now sitting on his desk.

The editorial noted:

Two provisions, however, could spell trouble for Florida policyholders.

One opens the door to rolling back mitigation discounts that companies provided to homeowners, if they can make a convincing case that premium reductions were too high.

Another allows increases of no more than 10 percent under “expedited review” for certain fixed costs — provided insurers forgo filings to increase base rates the same year.

At best, this makes the bill a 50-50 proposition for consumers. It offers a variety of provisions that protect policyholders, but it also creates loopholes that unscrupulous insurers could exploit, at the expense of consumers.

The best course for Gov. Crist is to veto this bill and insist that legislators give him a clean bill during the upcoming special session — one he can sign without reservations.

The Miami Herald editorialists missed the part of the bill which reduces replacement cost benefits. A follow up story in the Miami Herald, Veto Watch in Place for Property Insurance Bill, made that point, quoting from Florida House of Representative Rick Kriseman:

He cites three main concerns in the language that give insurers the ability to:

• Withhold a full claims payment until homeowners repair structural damage, contrary to current replacement-cost-value policies;

• Increase rates each year up to 10 percent to cover reinsurance and inflation costs under a separate filing that gets “expedited review;“

• And offer fewer mitigation discounts to policyholders who strengthen homes against storms and even charge fees to those with inferior protections.

But more than anything, Kriseman said, he disliked the way the Republican leadership in the Legislature strong-armed the bill, blocking all amendments and limiting debate.

“I think there is good reason to veto it,” he said. “Just the mere process alone, the way it was shoved down our throats.”

A leading condomium law firm, Becker & Poliakoff, did not miss problems with the property insurance bill when reporting to its legion of clients and readers in Industry Leaders Request Veto of SB 2044 Citing Ability for Insurer’s to Withhold Partial Payment of Claims:

One part of the bill purportedly bars homeowners from filing claims. It says that the insured must provide notice of any claim (including supplemental or reopened claims) based on a windstorm or hurricane loss to the carrier within three (3) years of the date of the storm. While it doesn’t change the applicable statute of limitations for civil actions, in some cases homeowners do not have a full understanding of all the damages caused by the windstorm/hurricane until after demolition and reconstruction begins. Thus, the three (3) year time frame may result in loss of insurance proceeds, depending upon whether the homeowner has the ability to attend to reconstruction after the storm.

Another section of the bill allows the insurance carrier to change the terms of the policy upon renewal by use of a notice entitled "Notice of Change in Policy Terms". Payment of the renewal premium constitutes acceptance of the new terms.

Most importantly, the bill removes the prompt payment requirements on the part of carriers. It only requires the carrier to pay "actual cash value" minus the deductible, regardless of whether the homeowner paid for replacement cost coverage. The carrier then only pays additional amounts once a contract for reconstruction is in place and the costs are incurred (as the work progresses). Critics argue that this provision disproportionately impacts lower income families that do not have funds available to pay for reconstruction (along with all the non-insured items) and/or replacement of personal property without insurance proceeds.

A comment by Mike Rump to that post hit the mark regarding the replacement cost benefit loss:

This new law should be veto’d. The legislature quickly forgets the number of complaints filed by consumers regarding the filing of holdback depreciation claims during our very recent and busy storm seasons. Consumers who pay for replacement cost did not understand why the carriers were allowed to hold back depreciation until proof of repairs were presented. Consumers saw this as another delay tactic by the carriers and it forced consumers to jump through more hoops after a disaster to completely recover the money they desperately needed for repairs. For this reason, the legislature passed a statute barring carriers from holding back depreciation on fire and hurricane claims only.

Well, now the issue is back on the table and this should come as no surprise. The current legislation will once again allow carriers to hold back depreciation on all first party claims. Property Insurance carriers stand to gain millions and Florida’s consumers stand to gain additional paperwork and hassles in fully collecting what they are owed. Veto this Bill Governor.

This past weekend, I noted two important reasons why the law should be vetoed in Is the Proposed Property Insurance Bill Bad for the Average Florida Insurance Consumer? and Is the Property Insurance Bill Unconstitutional Because It Establishes Support for a Christian Organization and No Other Religious Based Organizations? In Senators Mike Fasano and Rhonda Storms Come to the Rescue of Policyholders and An Interesting Day in Tallahassee and Thoughts on the Pending Replacement Cost Coverage Legislation, I explained my frustrations that the current legislation takes away benefits from my future clients, and I gave credit to legislators who stood up to this poor insurance bill.

All this begs the simple question calling for the veto, Pay Higher Premiums and Get Less Coverage Legislation — Can Anybody Explain Why This is Good for Floridians?