Editorial: Hurricane ready?
Gov. Charlie Crist wants us all to "just be ready" for the hurricane season, which begins on June 1.
"Every Florida family should be prepared, should have a plan and be on guard," Crist said. Crist advised Floridians to keep at least three days worth of bottled water and canned foods on hand and stock up on radios, flashlights, batteries and other storm essentials.
Floridians should be ready for a hurricane. But so should the state. Yet it’s not at all clear that Tallahassee is ready for the storm season.
Over the past couple of years, in the interest of keeping insurance premiums down, Crist and the Legislature have frozen rates for the state-owned Citizens Property Insurance Corp. Meanwhile, the state rejected rate increase requests from private companies like Allstate and State Farm Insurance. State Farm has announced that it is withdrawing from the Florida property insurance market, dropping 700,000 policies.
Crist says "good riddance" to the prospect of companies pulling out. The problem is that Citizens as well as the state-run Catastrophic (CAT) Fund are underfunded to the tune of billions of dollars. Last week, the Florida Association of Insurance Agents and the Consumer Federation of the Southeast warned that the state’s efforts to keep rates down may backfire if Florida experiences one or more major hurricanes this season.
"The only thing worse than expensive insurance is worthless insurance," Walt Dartland, director of the federation, said.
Added Florida Association of Insurance Agents’ President Jeff Grady: "In pursuit of artificially low rates, Florida has created a fragile, unstable insurance market that leaves Florida homeowners and taxpayers in grave financial risk."
This past session, the Legislature authorized the state to begin increasing rates for Citizens by as much as 10 percent a year, and rates for the CAT Fund by 1 percent annually, until those entities are actuarially sound. That’s a good start, but it may not go far enough.
A separate bill would allow large insurance companies, like State Farm and Allstate, to sell policies and set rates without state approval. Crist has indicated that he may veto that bill, but that would be a mistake.
The so-called "Consumer Choice Bill" would do exactly that; give Floridians the option of going with a larger insurer, and paying higher rates, knowing that those companies are in a better position to cover storm losses. Under the legislation, companies would have to notify customers that its rates are not state-regulated, provide customers with a comparison of its rates with Citizens’ and include windstorm coverage.
If the state has been keeping both Citizens and private insurance rates unrealistically low for political purposes, then prudent Floridians may want the option of buying more expensive coverage. Denying them that prerogative would simply be another act of political expediency by a governor who built his popularity on a foolish promise to make our premiums drop like a rock, and who now wishes to ride that popular wave into the U.S. Senate.