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No way to address a crisis

Florida's homeowners insurance crisis has just ratcheted up another notch. The revelation that the state-run Citizens Property Insurance is hemorrhaging even more money than expected makes it even more imperative that Gov. Jeb Bush and the Florida Legislature make this their top priority. Yet they are distracted by tuition vouchers and tax cuts even as Floridians can't find coverage and those who have it are facing hundreds of dollars in state assessments on top of huge increases in their premiums.

While the governor and state lawmakers are busy micromanaging the high school curriculum and limiting civil liability for businesses, where is the urgency to address the state's most pressing concern? Bush has no plan of his own to deal with the insurance crisis. The House and Senate bills are, to be kind, works in progress and a long way from reaching the full chambers. One-third of the legislative session already is over, and there is every indication that insurance will be one of the last bills passed in the hectic final hours. That's no way to address a crisis.

As Tallahassee fiddles, the problem grows worse. More than 800,000 homeowners are now insured by Citizens, the insurer of last resort. There will be a 10 percent surcharge on all homeowners policies this year, but it turns out that will cover only half of Citizens' deficit. Its 2005 deficit has mushroomed to more than $1.7-billion, and Citizens appears to need another assessment of an additional 10 percent. Meanwhile, windstorm rates have nearly doubled over the last two years in some areas. Even middle-class Floridians can't continue to absorb such dramatic increases without real pain. The situation can't be good for the cooling housing market or the overall state economy.

One reason Bush and state legislators aren't talking about homeowners insurance every day is that there is no easy solution to making coverage more available and affordable. A House committee voted last week to use more than $750-million in tax revenue generated by hurricane recovery to lower the Citizens deficit and start to rebuild reserves in the Hurricane Catastrophe Fund, which provides reinsurance for insurance companies. Bush has said he is open to such a move as long is it is accompanied by reforms, and there is no other way to provide homeowners with immediate relief.

There are some long-term proposals that have merit. One would prohibit Citizens from providing windstorm coverage for homes worth more than $1-million. This change alone would reduce Citizens' exposure by more than $800-million. But the rush to sock owners of second homes and seasonal residents with higher rates and surcharges looks more like political expediency than actuarial soundness and needs some more thought.

Bush has a responsibility to take a more visible public role in developing a comprehensive response and selling it. Some last-minute compromise in the final moments of the legislative session that few lawmakers understand won't cut it. The governor may have made a deal with legislative leaders to stay in the background, but this is a crisis that requires his leadership and full attention. He is excellent at directing hurricane recovery efforts. He should be just as focused on making sure homeowners insurance is available and affordable.

[Last modified March 25, 2006, 03:15:07]