TALLAHASSEE, Fla._A much debated bill that would have deregulated rates on some residential property insurance policies fell victim Wednesday to Gov. Charlie Crist's veto pen.

The bill would have let willing homeowners buy higher-priced, unregulated coverage for hurricanes, fires and other property hazards but only from highly capitalized national companies.

In his veto message, Crist wrote that the "Consumer Choice" bill, instead, would have given the choice to those big insurers.

"These select property insurance companies will be able to cherry-pick, or sell only to profitable policyholder risks, while at the same time offloading their undesirable policyholders that are higher risk to their competitors and Citizens Property Insurance Corp.," Crist wrote.

Citizens was created by the state to offer coverage to consumers who couldn't get it on the private market. With private companies bailing out of coastal areas and increasing their rates, Citizens has grown to become Florida's largest property insurer, with more than 1 million policies.

The bill's advocates included State Farm Florida, the state's largest private property insurer, which called the legislation "a positive step for Florida residents who expect and deserve their insurer to be there following a major disaster."

The subsidiary of Bloomington, Ill.-based State Farm Insurance has announced plans to pull out of the state after Florida Insurance Commissioner Kevin McCarty rejected a 47 percent rate increase. Company officials said without higher premiums they face the prospect of being unable to pay claims.


Some lawmakers saw the deregulation bill as a way to persuade the insurance giant to remain. Crist has said Floridians will be "much better off without" State Farm.

House Speaker Larry Cretul, R-Ocala, was among those disappointed by the veto.

"Florida has demonstrated that over-regulating the insurance industry can actually make things worse for consumers _ not better," Cretul said in a statement. "It seems reasonable to give homeowners as many choices as possible."

Crist also wrote that the bill would have disrupted efforts to make Florida's insurance market more competitive by spinning off Citizens policies to private companies, most of them relatively small and new to the state.

He wrote that if the highly capitalized national companies "are allowed to 'redline' areas of the state they do not wish to write, this will harm consumers and investors who have worked in good faith to create a competitive marketplace."

The governor added that the bill also would not have prevented companies from collecting unregulated premiums and then leaving the state with "hardworking families' earnings."

The sponsor, Rep. Bill Proctor, R-St. Augustine, and other supporters argued the bill would have given consumers the ability to get policies with better financial backing if they were willing to pay for it.

They also said attracting or keeping more robust insurers could reduce reliance on the Florida Hurricane Catastrophe Fund, which provides backup coverage for insurers.

If the fund has insufficient resources to cover losses, the difference would be made up through assessments on nearly all types of property insurance including auto.