The insurance situation down in Florida is beginning to look a little like the Harlem Globetrotters vs. the Washington Generals, the Nebraska Cornhuskers of 10 years ago running up the score on some Division II chump of the week, or the New England Patriots of this year against any other team on the planet. Reminds me of this board book my kids love: We’re Going On A Bear Hunt — a family is all keen to go catch a big old bear, boasting how they’re not afraid as they cross a river, wade through mud, go through a blizzard and a scary forest until they find one sleeping in his lair. Then the bear wakes up and chases them clean out of his cave, back across the river, through the mud, through the blizzard, through the forest and right to their own house, where they bar the door and go hide under the covers.
Right about now Florida Gov. Charlie Crist might be turning through the pages of that book under the covers to see if there is a second chapter, or an alternate ending, because back in January he and Florida lawmakers boasted how they were gonna catch a big one, gonna fix the insurance crisis, they’re not afraid. They dumped a lot of risk on Florida taxpayers, came up with some ideas like making the state a reinsurer, while Crist did his imitation of Triumph, the Insult Comic Dog, ripping into insurers as enemies of man and nature. But the realities of the market are that central planning does not work, nor do price controls, and the market stood up on its hind legs and bared its fangs and stampeded Charlie and his crew.
This kind of thing has happened before, of course. It seems incredible that it could have occurred just 35 years ago in this country, but Pres. Richard Nixon actually imposed wage and price controls nationwide, a disastrous move that hid the workings of the market but did not eliminate it, and when the controls were finally lifted, resulted in runaway inflation, high interest rates and high unemployment. You can read a bit about that by clicking here for an excerpt from the book Commanding Heights.
Why do I mention this? Because I saw this item in the Palm Beach Post’s insurance blog about Allstate requesting a premium hike of 41.9 percent, after Crist more or less promised rates would be rolled back. This is only the latest of requests from dozens of insurers for substantial rate hikes. Pretending the state can central-plan or scream its way out of this mess is just whistling past the graveyard. Pretending that selling property insurance in Florida is not risky and trying to manipulate the market, or create a fake state-run market, is destined to be as spectacular a flop as Nixon’s wage and price controls.
Incidentally, when I poke fun at Mississippi AG Jim Hood, some folks actually take me on and stick up for him. When I make fun of Crist, no one says boo. Isn’t there someone out there who thinks he’s doing a great job? What is that sound I hear? Crickets?