The Tampa Tribune
Published: April 27, 2009
Promising legislation passed by the House and on the Senate’s agenda today would give private enterprise a chance to remedy Florida’s insurance crisis.
The largest insurer of property in Florida is Citizens Property Insurance Corp., which is run by the state. So is the Florida Hurricane Catastrophe Fund, which provides backup insurance for private carriers. Neither have the resources to deal with a major storm. So taxpayers are at risk.
The bills, though not identical, could change that. They would allow private insurers to charge what they want, largely beyond the regulatory authority of the state. The idea is to give consumers choices and some control over their hurricane coverage while encouraging well-capitalized private carriers to do business in Florida.
Consumers want and need more options. The state needs more private insurance companies and the private capital they bring. When reconciled, this legislation deserves passage.
At first, both bills would have freed purchasers of private insurance at a market-based rates from having to pay a state assessment that would be levied to cover claims Citizens could not pay if a monster storm hit. But state insurance officials complained that excluding these policyholders would jeopardize the state’s insurance plans.
This is where lawmakers are in a pickle. They must provide adequate consumer protection yet feel politically compelled to suppress rates.
Those in opposition to the bill argue their constituents aren’t worried about the solvency of the CAT fund; they are worried about paying their bills.
But if the state were forced to hit policyholders with huge assessments because its insurance plans can’t pay claims, the financial pain would be even greater.
Opponents should remember the purchase of potentially more expensive private insurance would be up to the consumer. If homeowners want to be insured through a large insurance company they know has money in the bank and the ability to efficiently pay claims, they should have that choice.
There really is no downside to the legislation, particularly if it is successful in helping Florida keep, or bring back, State Farm, Allstate, Nationwide and other carriers with good track records.
Gov. Charlie Crist has hinted he may veto the legislation if it passes. He should not. It offers a possible free-market solution to the state’s insurance mess.