Print

Email story

Comment

Email editor

The state's in anyway, so why not really fix it?

By HOWARD TROXLER
Published May 14, 2006

Saturday I got up intending to weed the garden and try out a new chain saw. Instead, after reading about State Farm's and Allstate's latest rate hikes and policy cancellations in Florida, I decided this couldn't wait.

In the past few days I have heard the same idea from a Republican businessman and a Democratic politician about an approach to Florida's hurricane insurance problem. Remember that the state of Florida already is in the insurance business. So it is too late to complain about Big Government or socialism or any of that kind of stuff.

Yes, Florida already is in the insurance business - except in a lousy, stupid, worst-possible way. Florida's state-run insurer only covers those customers that the private companies refuse to take.

Imagine if every other business model worked that way! Everybody could dump their least profitable or highest-risk customers on the government, and keep the good stuff. So if there is anybody in the current situation who is benefitting from government intervention, it is insurance companies.

But not the rest of us. The rest of us keep getting socked with premium increases and assessments to prop up the high-risk, state-run Citizens Property Insurance Co. So here's the idea:

Let's have the state of Florida really cover hurricane damage. Let's create a state insurance fund that would cover all individual hurricane claims over, say, $100,000. Private companies would have to cover the first $100,000. After that, the state coverage would kick in.

Here are the advantages to this plan:

First of all, it gives private insurance companies an incentive to return to the Florida market. It gives them the one thing they crave the most, next to making money: a known and acceptable limit to their exposure.

Second, the state's coverage would kick in only in the worst cases. The vast majority of claims in a "routine" hurricane would be for less than $100,000.

Third, creating a statewide insurance fund would spread the risk beyond the highest-risk customers now insured by Citizens.

Fourth, we would remove profit, taxes and reserve requirements from the equation, all of which drive up rates. The state would have the flexibility to borrow money to meet catastrophes.

And the disadvantages?

Well, there's the disadvantage of expanding Big, Liberal, Socialist Government, but like I said, we've already got it, except we have it in the worst version.

There's also the fact that the history and management of Citizens Property Insurance Co. has hardly been stellar so far. I would wipe out Citizens and start over.

No doubt you already have thought of several objections and problems. Who would be eligible? How would premiums be assessed? What are the prospects for fraud?

Details, details.

Again, this is not my idea. The first time I heard it was last week, when a Republican business owner ran it past me.

By coincidence, within 24 hours, I heard it again from a member of the Legislature, who told me something I didn't know:

Exactly this idea was proposed in this past session of the Legislature. It went nowhere. Instead, the Legislature adjourned without doing much. One week later, when the coast was clear, State Farm and Allstate announced their latest moves. Nice.

As for why the Legislature refused to consider the idea, maybe it was because of the source, which was wildly unpopular among the Legislature's leadership. Odious, even.

I speak, of course, of Democrats. Both the House and the Senate are controlled by solid Republican majorities. They said the Democrats' idea was socialist and all that.

"We never even got a hearing on the proposal," said Rep. Dan Gelber of Miami Beach, a Democratic leader in the House. "So much for the thirst for innovative ideas."

If I were the Republicans, especially a Republican candidate for governor, I would now do what Bill Clinton would do - steal the idea from the other party and take credit for it. I am sure our Democratic brothers and sisters would be happy merely knowing they had helped their state. Right, Dan?

On the other hand, if the Republicans don't want to do anything, maybe the Democrats should run with it in November. By then we'll know whether things are still bad, or, dare I say it, a lot worse.

[Last modified May 14, 2006, 00:49:03]