News & Updates


If Big One hits, the state could go bankrupt


The notion’s so damn bleak, it must have been imagined by Victor Hugo. 

Our novel’s set in the recession of ’09. One out of every 10 workers is unemployed. Tourists are scarce. The housing market has been savaged by foreclosures and unsold inventory.

State revenue’s dropping faster than they can jettison schoolteachers. The state descends into such a cheerless funk that Florida International University fires its cheerleaders.

Our novel adds an interesting little aside with calamitous repercussions: A populist governor, bent on wooing voters for his Senate campaign, chases big insurers out of Florida like a pack of mangy dogs.

Only a mind of someone like Hugo, or Eli Lehrer of the Competitive Enterprise Institute, could conjure up yet another dreadful twist to a tale of relentless misery: the Big One.

Except that Lehrer, who studies insurance for CEI, suggests that a major hurricane will turn Florida’s story into a true-life tragedy.

”The risk is extreme,” Lehrer told me Friday. “The risk is not only a massive loss of life, but that Florida could go bankrupt.”


Gov. Charlie Crist vetoed an insurance bill Wednesday that would have allowed major insurers to raise property insurance rates. His veto kept homeowner rates low and probably salvaged the small state insurers that scavenge customers abandoned by national firms. But when the big boys abscond, they stick all of us with a monumental gamble.

A fourth of Florida’s homes, including most of the pricey stuff clustered along the storm-vulnerable shore, are covered by state-run Citizens Property Insurance, a giant casino of an operation that has bet $3 billion in assets against $450 billion of exposure.

Citizens and most of the state’s smaller insurers draw on Florida’s Hurricane Catastrophe Fund for reinsurance.

The Cat fund has only $3 billion in assets to offset $28 billion in liabilities.

If the Big One hits, Lehrer said, state taxpayers get stuck with the balance. At best, the state could raise $15 billion in bonds to cover the losses, Lehrer said. We won’t have the money to cover the excess claims, which, if a major storm hits South Florida, could top $100 billion.

”You could become insolvent as a state,” he said.

We’ll be bankrupt. We’ll be refugees in Zilchville, huddling under big blue tarps, waiting for the insurance checks that never come.


I had always assumed that the one positive aspect of a hurricane, however awful, would be an instant jolt of economic stimulus from insurance checks.

Remember, after Hurricane Andrew, when any wino with a hammer could find work as a roofing contractor?

But Mark Bonn of Florida State University, who studies the economic effect of hurricanes, said that the construction workers who swarm into stricken areas just don’t make up for the missing tourists. They don’t frequent nice restaurants, theme parks, nightclubs. They don’t buy souvenirs.

The Big One would be downright inconvenient any year. But in the dreary summer of 2009, a major storm, a potential $100 billion wallop, could amount to an epic tragedy, reminiscent of one of those impossibly sad French novels.

We’re writing our own stormy version of Les Misérables.