The Pressing Need For Insurance Reform in Florida
Florida’s property insurance market is currently in disarray, the product of over-regulation that has hampered competition. With the imminent threat of hurricane season, the Florida state legislature is once again considering the issue of insurance reform; hopefully it will take the opportunity to revitalize Florida’s fiscally vulnerable insurance market. Without comprehensive insurance reform, many Floridians will be forced to rely on small unrecognized insurers, or the state-run Citizens Property Insurance Corporation. Consumers may not be pleased with either choice, as both have been found to be teetering on the edge of solvency before a hurricane even hits.
News Service Florida recently reported that James Malone, chairman of the Citizens Board of Governors, warned policymakers last month that if a hurricane were to hit, Citizens’ assets “would be wiped out in ‘few short hours.’”
Regarding the state-run Citizens Property Insurance Cooperation, News Service Florida reports:
According to the Herald Tribune, Sen. Mike Bennett (R-Bradenton) is introducing legislation that would expand consumer choice and attract new companies to enter the state’s insurance market. State Rep. Bill Proctor will introduce a companion bill in the House. The Herald Tribune reports:
Bennett’s approach hinges on the theory that unregulated rates would attract new companies to Florida and eventually lower premiums. The idea is that more homeowners would opt for coverage with private companies instead of with the state-created Citizens Property, which has more than 1 million policies and can put a charge on all insurance policies, including auto, if it runs short of money.
Bennett’s and Proctor’s legislative proposals are a sensible attempt to streamline Florida’s currently feeble property insurance market. Aware of both the natural and financial disasters that are looming, the legislation has expressed Bennett’s general understanding of the need for reform. The Herald Tribune reports Bennett exclaiming:
We are going to run out of insurance carriers and we are going to run out of time because sooner or later we are going to get hit with a hurricane.
The best hope for Florida’s consumers is that the state legislature adopts sensible, market-driven insurance reform in the near future. Florida’s dysfunctional property insurance market is the product of too much legislation and regulation that has all but eliminated the ability to compete in the insurance market. Insurers have left the state and consumer choice has dwindled as a result of these policies. Without sensible insurance reform, Florida’s current insurance disarray could turn into a financial disaster that would hit at the worst possible time—after a major storm makes landfall.
