Florida’s Gamble

It’s all about rates,” maintained Sam Miller, of the industry’s Florida Insurance Council. Florida lawmakers in January passed legislation they hoped would lower Floridians’ skyrocketing property insurance rates. Gov. Charlie Crist, who represented a stark departure from the approach of his predecessor on insurance, couldn’t wait to sign it.

It included a scheme for making about $12 billion of lower cost reinsurance available to insurers through the state’s hurricane catastrophe fund, in hopes those savings would be passed along to consumers. It also froze the rates of the state-backed Citizens Property Insurance, which made it easier for this insurer of last resort to compete with private insurers. Politicians promised property owners as much as 24 percent savings. The actual savings for homeowners have been lower than that on average but not for lack of cajoling by Crist and scrutiny of carrier rate filings by Insurance Commissioner Kevin McCarty and his team.

Private insurers were unhappy about being pressured by state regulators to cut their rates and about having to compete with the low cost Citizens.

By expanding the state fund, Florida exposed itself to potentially billions of dollars in liability in the event a big storm season like the one that cost Florida $36 billion in insured damage in 2004 and 2005 hit again. “We’re gambling,” acknowledged Rep. Ron Reagan, R-Bradenton, at the time the measure passed. For 2007 anyway, Florida beat the odds. “It’s our first successful faith-based initiative,” quipped House Democratic leader Dan Gelber.

Topics Florida