Florida Gov. Charlie Crist has vetoed a measure that would havepermitted some insurers to charge unregulated property rates,stating that it would allow them to essentially "redline" areas ofthe state.

The governor said that HB 1171, the "Consumer Choice"bill–permitting unregulated rates for carriers that have a surplusof at least $200 million and a ratio of net written premium tosurplus of no more than two-to-one–would hurt emerging Floridadomestic companies.

His decision angered insurance industry interests, but drewpraise from a consumer group.

Florida Insurance Commissioner Kevin McCarty had urged thegovernor to veto the bill, drawing anger from the bill's sponsor,State Senator Michael S. Bennett, R-Bradenton.

Sen. Bennett claimed Mr. McCarty had made assurances he wouldnot oppose the bill before writing a letter to Gov. Crist askingfor the veto.

In his veto message, Gov. Crist said rates have remainedrelatively stable since passage in January of a bill which loweredrates by 15.9 percent.

The measure he vetoed would reverse that, he argued, by allowingcertain insurers to charge excessive rates at a time when peoplecannot afford to pay them.

He also said the state has added new insurance companies and "asignificant amount of new capital" since 2006, and the bill, headded, would "disrupt the effort to build an increasinglycompetitive insurance marketplace…."

Insurance company trade associations argued the market would bemore competitive, with consumers having the choice to insure withcompanies charging either regulated or unregulated rates.

But Gov. Crist said the select few insurers that could chargeunregulated rates would simply pass on bad risks to non-qualifyingcompetitors and Citizens Property Insurance Corp., the state'sinsurer of last resort.

"Commissioner McCarty knows that Gov. Crist carefully consideredthis bill and has done what is best for the people of Florida," Mr.McCarty's office said in a statement.

The American Insurance Association expressed dissatisfactionwith the veto.

"AIA believes the governor's veto is an opportunity lost forFlorida–an opportunity to provide a modest, market-basedalternative to Florida's overregulated property insurance marketthat has been in short supply in recent years," said Cecil Pearce,AIA Southeast region vice president.

In addition, Liz Reynolds, Southeast state affairs manager forthe National Association of Mutual Insurance Companies, said that"NAMIC has been working for regulatory modernization, includingfreedom from rate regulation, in the states for nearly 10 years.Competition, rather than heavy-handed state control, is the bestregulator of the markets."

Ms. Reynolds, noting that "Florida is often cited as Exhibit Ain the call from some to create a federal insurance regulator,"said that "Gov. Crist could have altered that perception. Instead,he chose to continue his misguided policies that harmconsumers."

"It is unfortunate and somewhat surprising that the governorvetoed HB 1171 considering the groundswell of support from Floridaconsumers, who expressed their desire for marketplace choice," shesaid.

"NAMIC would have preferred that this bill be applied to allinsurers, but it was a potential first step to improve the marketin Florida," she added. "NAMIC calls on the legislature to revisitthis legislation, but to amend it to apply to all insurers doingbusiness in Florida."

However, J. Robert Hunter,director of insurance for the Consumer Federation of America,supported the veto.

"This legislation would have let insurance companies raise homeinsurance prices at will in Florida's uncompetitive insurancemarketplace," he said, adding that the bill "was an invitation toinsurers to game the Florida regulatory system and abuseconsumers."

"No insurance rates could have been found to be too high, noform of discrimination could be found to be unfair if a policy isissued under the terms allowed by the legislation," he charged.

Eli Lehrer, director of the Center for Risk, Regulation andMarkets, part of the Competitive Enterprise Institute–aconservative think tank–attacked the veto, saying it will likelyleave State Farm Insurance with no choice but to continue itswithdrawal from Florida.

"I wouldn't be surprised at all if other insurers follow," hesaid in a statement. "I can't see why any insurer of any size willwant to do any business in Florida. And, one way or another,Floridians are going to pay the price."