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An insurance solution

It's not a good idea to create another state-run insurer of last resort, this time for businesses. A reinsurance program is the prudent step.

By Times editorial
Published August 7, 2006

The thought of creating another state-run insurance outfit that directly sells insurance to policyholders gives Gov. Jeb Bush the "heebie-jeebies." He isn't alone.

The governor and Cabinet were smart to give state insurance officials some latitude last week in addressing the crisis that businesses face in finding and affording insurance, but the state should not create a twin to the Citizens Property Insurance Corp. A reinsurance program that provides enough incentives to lure private insurers back into the business market is a better way to go.

It doesn't take an insurance expert to grasp the difficulties Citizens has grappled with as it has become the largest homeowners insurer in the state. It pays millions to private insurance agents to service the policies and received wide criticism for its poor performance in processing hurricane-related claims in 2004 and 2005. A state audit this year blasted Citizens' management practices, and several of its officers and a board member had conflicts of interest. While Citizens has made significant strides toward straightening things out, its weaknesses are a reminder that creating a similar last-resort insurer for businesses could be just as rocky.

That's why creating a reinsurance program paid for initially by state letters of credit and later by a combination of bonds, premiums and assessments is the prudent way to go. Insurers then could buy that reinsurance to protect themselves following hurricanes that leave behind significant damage, and the state would not have to create the bureaucracy of another publicly run insurer from scratch.

The governor and Cabinet will hear state insurance commissioner Kevin McCarty's proposal on Aug. 15, and the hope is something will be in place in September. That's fast, but it won't come too soon for businesses that can't find or afford coverage and risk closing their doors or paying for storm damage out of their own cash registers. Funny how politicians in Tallahassee woke up to the insurance crisis when business leaders started complaining but still haven't figured out how to help homeowners facing the same problems.

[Last modified August 7, 2006, 06:26:33]