Editorial: Hurricane risk
Published: Thursday, April 8, 2010 at 6:01 a.m.
Last Modified: Wednesday, April 7, 2010 at 5:12 p.m.
To avoid a political hurricane over property insurance premiums, Florida elected officials have opted to keep insurance rates artificially low while piling more and more of the risk on the state-owned Citizens Property Insurance and the Hurricane Catastrophe Fund.
And that strategy works just fine, so long as a real hurricane never again strikes Florida.
But the odds are one will. And a report this week from the private research group Florida TaxWatch warns that the costs of a single major storm could fall squarely on taxpayers.
“Should a major storm hit, Florida will be forced to borrow tens of billions of dollars – more money than any state has ever borrowed,” warns Rep. David Murzin, chair of the House committee that presides over insurance matters, “and the interest payments alone will suck billions of dollars out of the state for decades to come.”
It’s a bitter truth to swallow, but the only way to lessen the risk to taxpayers is to give private insurance companies more leeway to raise rates while returning Citizens to its original role as “insurer of last resort.”
The TaxWatch study puts it this way: “Floridians must either choose between affordable, state-provided windstorm insurance or windstorm insurance from more clearly solvent private insurers.”
On the surface that might seem an easy choice, but for one cautionary note: “Affordable coverage means little if the provider becomes insolvent in a crisis,” the study adds.
Reluctant to embrace rate reform for fear of a political hurricane, our elected officials only make Floridians more vulnerable to the real thing.