News & Updates


Editorial: Time to bite the bullet on insurance

May 27, 2009

It’s a bitter pill, but Gov. Charlie Crist should sign the property insurance rate-deregulation bill sent to him by Florida lawmakers. 

Crist’s attempt to break the private insurers to his will has failed. Now we have to find another way to prepare financially for a devastating hurricane. Insurance rates will likely rise, maybe a lot. But right now we don’t have enough insurance.

Crist promised to lower property insurance rates that had been soaring since the devastating storms of 2004 and 2005. But while he fought private insurers, state-backed Citizens Property Insurance Company – supposedly the insurer of last resort – became Florida’s primary property insurer. It has too many policies covered by too little capital. Meanwhile the state’s Hurricane Catastrophe (CAT) Fund, which was supposed to help make lower rates possible, has also become depleted.

State Farm and other big private insurers got some rate relief, but not as much as they said they needed. When repeatedly denied a 47 percent rate hike, State Farm threatened to join other companies quitting the Florida market.

The Legislature blinked, and with good reason.

We need the big private insurers to start writing new policies again. Without them, Citizens and the CAT Fund will be inadequate to the task of recovery from a big storm, forcing the state to try to borrow large amounts of money in a bad credit market, and putting taxpayers on the hook for billions.

The new legislation would let private insurers charge what the market will bear for higher-end policies, which will not be eligible for state bailout. It’s hoped that rates will be restrained by competition among the big companies, from Citizens and from some 40 new private insurers that have sprung up recently.

Life in Florida is inherently risky. Our 1,200 miles of heavily settled coastline stick into tropical seas that nurture massive storms. As we have said before, one way or another, the people who own property here are going to have to pay for the risk of living here, and that cost is going up.

Crist should sign this bill, then engage himself in making the new system work for consumers and taxpayers.