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Insurance can't wait

Serious proposals on the homeowners insurance crisis are beginning to surface, but the candidates for governor aren't doing their part.

By TIMES EDITORIALS
Published July 30, 2006

It doesn't take an opinion poll to determine that Florida's property insurance crisis is getting worse and is easily the state's top issue. Rates continue to soar, homeowners policies continue to be canceled and private coverage is next to impossible to find in many areas.

There is a powerful storm brewing - and thank goodness it's not another hurricane (yet). It is the anger among homeowners who can't find coverage or can't afford the coverage they have. It is the rising fear among business leaders with the same problems who see the downturn in the housing market and fear the state's robust economy will collapse without insurance that is available and affordable. Yet Tallahassee's response has been too slow and too timid, and none of the candidates to succeed Gov. Jeb Bush are offering particularly bold solutions. This won't wait for another study commission and another patch job by the 2007 Legislature.

The governor and the Legislature inexplicably failed to give this crisis the time and attention it demanded earlier this year. Bush stood in the shadows too long and waited for state legislators to take the lead. Then legislators waited until the last minutes of the session in May to cobble together a package too watered down to have an immediate impact on the insurance market. Pouring more than $715-million into the state-run insurer of last resort, Citizens Property Insurance Corp., helped lower assessments. Other provisions won't take full effect for months or are phased in. A new grant program to help homeowners harden their homes against hurricanes is smart but will take years to make an impact. The politicians who failed Floridians in the spring are getting the message from voters as they campaign this summer: Do something. Soon.

Since the Legislature adjourned, State Farm has won a rate increase of more than 50 percent. Nationwide is seeking an average increase of more than 70 percent. More homeowners are receiving letters from insurers that their coverage won't be renewed. Citizens has grown by 50 percent and become the state's largest insurer, with more than 1.2-million policyholders and rising. Realtors and businesses are sounding alarms, while insurers say they can't find affordable reinsurance. These trend lines can't continue much longer without significantly harming the state's economy and the household budgets of countless families.

There are some indications the message is finally getting through. Bush, Chief Financial Officer (and Republican candidate for governor) Tom Gallagher, and Senate President (and CFO candidate) Tom Lee want the state Cabinet this week to consider creating a new statewide insurance pool for business. The idea is not to create another Citizens for businesses but a reinsurer for private insurers. That would limit the private market's risk and encourage insurers to write more policies with more reasonable premiums. It is a reasonable response. So is a proposal by Gallagher and others to make it easier for insurance companies to tap into the Florida Hurricane Catastrophe Fund after a storm. Lowering the losses an insurer would incur before tapping into the fund could entice some homeowners insurers back into the market. But it would require legislative approval and more money from the state or policyholders after a storm.

Much of the discussion among the candidates for governor hasn't been as helpful or thoughtful. Everybody wants a national catastrophe fund, but Congress isn't going to create one any time soon. Attorney General Charlie Crist, who is leading Gallagher in the race for the Republican nomination, has yet to even offer a substantive proposal. He wants insurers selling other lines of coverage in the state, such as auto insurance, to be required to sell homeowners insurance. That might draw applause from frustrated homeowners, but it won't work. Two of the top auto insurers, Geico and Progressive, don't even write property insurance.

The Democrats aren't much better. U.S. Rep. Jim Davis and state Sen. Rod Smith tangled in last weekend's debate over how property owners collect from multiple insurers when there is both wind and flood damage. That's important, but it's a side issue now. So are many of the provisions of Davis' "bill of rights" for homeowners, such as where a consumer advocate for insurance customers sits in Tallahassee.

The most intriguing idea was floated by Democrats in the Legislature last spring and is part of Smith's package: Creating a new state-run pool that would cover all hurricane damages up to perhaps $100,000. Private insurers would collect that premium and cover everything else. That might prove unworkable, but it's worth a serious look and reflects the scale of the brainstorming that's needed.

It makes no sense to call a special session of the Legislature without a proposal on the table that would make a real impact. Any solution that brings private insurers back won't be cheap. It likely will require a significant commitment of tax dollars or assessments or some combination. And it should be broad-based, with the benefits and the burdens spread as widely as possible.

This is a statewide crisis that affects us all, and the next hurricane will only make it worse. Solving it will require leadership and ideas as large as the problem.

And that can't wait until spring.

[Last modified July 30, 2006, 01:09:33]