Hurricane Precautions: Is Florida Prepared?
[ HURRICANE PRECAUTIONS ]
Gov. Charlie Crist had some good advice for his constituents as the June 1 opening of hurricane season approaches: "Every Florida family should be prepared, should have a plan and be on guard." Crist advised Floridians to keep at least three days worth of bottled water and canned food 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. That may not be the case.
Over past years, in the interest of low insurance premiums, Crist and the Legislature froze rates for the state-owned Citizens Property Insurance Corp. Meanwhile, the state rejected rate increase requests from private companies such as 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 Fund are underfunded to the tune of billions of dollars.
’TAXPAYERS IN GRAVE FINANCIAL RISK’
Florida Association of Insurance Agents’ President Jeff Grady says, "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, such as 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 Consumer Choice Bill would 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.
Crist must be convinced that such disclosure will be clear and complete. Florida’s regulation of insurance rates has been a valuable service to state property owners – and there must be some way for them to know whether they are simply being gouged or charged a fair rate for a superior product.
A policy of forcing down insurance rates unrealistically low for political purposes is imprudent. If that is the case, denying residents and insurance choice would be another act of political expediency.
For the good of the people – not to mention the success of his U.S. Senate campaign – Crist must come clean and do the right thing. Any effort at this point to bolster popularity on a foolish promise to make our premiums drop like a rock and ride that popular wave into the U.S. Senate will backfire on Crist and his constituents.