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As Florida’s legislative session opens, insurance reform looms as a hot topic. Legislation and regulation have all but destroyed the market for property insurance in Florida, reducing availability while increasing the state’s financial risk. Poor public policy has driven major carriers from the market, leaving consumers a choice of either state-run Citizens Property Insurance Corporation or small insurance companies that most people do not recognize. And the Herald-Tribune recently noted that many of these companies may lack the resources to cover claims in the wake of a hurricane. Lawmakers must seize the opportunity to adopt real reforms that create and promote a working property insurance market for Florida’s homeowners.
In less than three months another hurricane season will arrive in the Sunshine State, yet the current insurance market in Florida remains problematic. State-run Citizens has become the largest insurer in the state and currently holds 1 in 5 of all homeowner polices. With Citizens badly overexposed and the Florida Hurricane Catastrophe Fund facing shortfalls in excess of $15 billion, should a major storm hit, the state is on the brink of financial disaster. Unless the Florida legislature passes meaningful reform, nothing will protect Floridians from massive assessments should a major storm hit the state.
Rebuilding requires resources, and if they do not come from insurance policies, they will come from the taxpayer. Instead of putting the state’s financial future at the mercy of the weather, efforts should be taken to encourage more underwriting in Florida rather than driving insurers out of the state. Insurance reform is critical to the state’s future, and lawmakers should push for real reform in 2010.