Editorial: Homeowners at risk
04/06/2010 © Tallahassee Democrat (Requires Login)
In the interest of consoling property owners in 2006 who complained, sometimes justly, that their rates were too high, the governor has led the parade too far in the other direction. He has marched Florida into the eye of a withering storm that would far exceed the physical chaos of a terrible hurricane season.
State over-regulation of the insurance market since 2007 has left Florida, and all homeowners therein, in the perilous state of being one big hurricane away from a catastrophe that might not only destroy their homes, but also scuttle any real chance of getting paid for their losses.
Florida TaxWatch on Monday emphasized what Sen. Mike Bennett, R-Bradenton, and Rep. Bill Proctor, R-St. Augustine, the legislative champions of the so-called consumer-choice bill, have been saying for at least two years. Florida’s self-insurance programs, Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund, are not up to paying claims when the next colossal hurricane strikes. Both now face enormous potential shortfalls.
We’ve been lucky — the governor, politically, even luckier — that in the last few years no killer hurricane has hit our vulnerable peninsula.
But that day is inevitable, and Florida needs a more robust insurance market to have any chance of addressing the urgency of that catastrophe.(2 of 2)
“Low-cost insurance may be the most expensive kind someone can buy, especially if that claim cannot be paid,” said Mr. Proctor when Florida TaxWatch unveiled its major analysis of Florida’s property insurance game of Russian roulette. And State Farm’s estimates of what is actuarially sound turn out to be today’s reality.
“Should a major storm hit,” added Rep. David Murzin, chairman of the Economic Development and Community Affairs policy council, “Florida will be forced to borrow tens of billions of dollars — more money than any state has ever borrowed — and the interest payments alone will suck billions of dollars out of the state for decades to come.” Former State Rep. Don Brown, an insurance expert, estimated as much as “$20 billion, which is an impossible amount.”
The assessments on such an occurrence will sink taxpayers — even those who own no property but will pay through auto insurance and other hidden hurricane taxes — and would discourage businesses from investing or locating in Florida, or thriving once here.
Some proposed legislation must be written into law.
The Legislature also must send again to the governor, and be willing to override his promised veto, the consumer choice bill (SB 876/HB 447) that would create an incentive for investors to bring their capital to Florida and help protect against the current threat of insolvency.
Lawmakers need to bring the insurance market back into balance with the public system and the private markets both in spreading the risks to the point that the loss from any single event can be absorbed — and life in the Sunshine state can return to normal instead of lying in ruins.