The Orlando Sentinel
by Don Brown
January 30, 2011
Florida hasn’t felt the fury of hurricane-force winds for five years, yet our state’s property-insurance market remains broken and a real threat to job creation and economic recovery.
Why? For starters, a dramatic shift in state government policy in 2007 — led by former Gov. Charlie Crist — placed state-run Citizens Property Insurance Corp. in competition with the private market.
That change in course has failed.
Today, Citizens is the largest property insurer in the state with 1.2 million policies, and it continues to grow rapidly, partly because it charges rates its own leadership admits are about 55 percent below what it needs to pay its claims.
That’s important for all of us, because both Citizens and the state’s other major property-insurance entity — the Florida Hurricane Catastrophe Fund — face billions of dollars in potential exposure that they don’t have the cash or financing in place to pay for.
So if a big hurricane hits in 2011, nearly every Floridian with an insurance policy will pay “hidden hurricane taxes” to bail out the state. These taxes apply to your auto, boat, home, business — even church policies.
Since 2005, Floridians have paid $6 billion in hidden taxes to cover the losses of Citizens and the Cat Fund. Many people don’t even realize they’re paying these taxes. But if the “Big One” makes landfall, you won’t help but notice; former state Chief Financial Officer Alex Sink estimated these taxes could add up to as much as $14,000 on the average Florida family over 30 years.
Clearly, the continued threat of these massive state assessments is an ongoing threat to the wallets of our state’s residents, and acts as an impediment to job creation and growth for our state’s businesses.
Meanwhile, state government’s headlong plunge into the property-insurance market — and its political manipulation of rates — has left consumers with few good choices for insuring their homes in the private market, and chased many financially strong private insurers and their billions of dollars of private capital out of Florida.
Thankfully, Scott believes that true economic solutions are found in the private sector, not in state government. Floridians should encourage our new governor and Legislature to make a fundamental course correction in public policy this spring.
It’s time to give choice back to consumers by reviving the private insurance market in Florida, and reducing the threat of hidden hurricane taxes on Florida’s families and businesses.
We cannot truly set Florida on the path of new job creation and economic recovery without fixing the broken property insurance market.
Don Brown is a former chairman of the Florida House Insurance Committee and a transition adviser to Gov. Rick Scott on insurance and legal matters.
