This editorial in the Washington Post is on the money about Florida’s recent insurance package pushed by Gov. Crist and passed by the Legislature.
What Florida did was bet against Mother Nature with a plan that is neither fiscally sane nor environmentally smart. The state-run insurance company expanded its portfolio of policies to include fire and theft — the better to spread the risk. And the threshold for troubled insurers to get at the state’s catastrophe fund was lowered while the upper limit on the state’s liability after a major storm was doubled. This makes it attractive for people to call their very own dangerous piece of hurricane alley home — much to the delight of developers. Never mind that Florida has nowhere near enough money to cover all the promises made to insurers and taxpayers. If the big one hits, they’re out of luck.
The way Florida’s state-run insurer, Citizens Property, is taking on risk is immensely dangerous. As we saw two months ago when Florida legislators rolled back premium increases Citizens needed to attempt to adequately fund its risk, a state-controlled entity is going to be subject to endless monkeying around in response to whatever the latest insurance crisis is in a state with a never-ending supply. Sure, legislators can also mess with private insurers, as Gov. Crist did when he put price controls on homeowners premiums, but they can respond to economic foolishness by keeping the good stuff and dumping riskier homeowners that Citizens then has to pick up. This in fact is what private insurers are doing in the Florida homeowners market.
As for Gov. Blanco, the jury is still out. She wavers between saying she doesn’t want to step on the toes of the private market and issuing rash statements about expanding the state’s own insurer of last resort to compete with private insurers. Some threat, considering the state insurer can’t even find its records for the last two years.
Also, since we wouldn’t want to leave Mississippi out of this discussion, here’s a story about a modest change to Mississippi’s state-run wind pool.