Scott Johnson Blog
January 12, 2012
Ever hear the story about the spoiled teenager who found a set of keys to a shiny new Corvette hanging on the Christmas tree? Instead of politely saying “Gee, mom and dad, thank you for this great new car”, he complained about needing more allowance to pay for the gas.
Despite deep divisions on how to solve the “Citizens problem”, everyone understands a surging policy count is less than desirable. Predicted to pierce 1.65 million near term, Citizens growth reflects 2007′s legislative myopia and it foreshadows darker economic days for those who can least afford it; many of them insured in Citizens.
In fact, nobody I’ve ever talked to admits to wanting Citizens to grow. Albeit for the usual selfish reasons, trial lawyers don’t want policies there–no bad faith and less coverage for sinkholes. As expected their fronting groups share the same opinion.
Southeast lawmakers lament Citizens growth, too, and even Senator Mike Fasano, whose district contains the only Florida county (Hernando) with a majority of households insured in Citizens, recognizes the danger its unabated growth creates for our state’s economic future.
None the less it was bound to happen. Sooner or later someone with a computer and a barrel of ink was eventually going to write that “growing” Citizens might be a “good thing”! It was Michael Mayo a columnist for the Ft. Lauderdale Sun Sentinel in Citizens Insurance Keeps Growing, and Maybe That’s a Good Thing.
And, guess what? It’s apparently because he doesn’t want to pay more! About Citizens rates being lower than private companies Mayo said… Geez, if the rates I’m already paying are competitive (about $4,000 a year for a small home, not including federal flood insurance) I’d hate to see what non-competitive is.
Non-competitive, Mr. Mayo, is what private companies charge compared to Citizens; which includes surcharges to enable you to keep paying less than you should.
Mayo again: The problem for many homeowners, especially in South Florida, is that there are no options besides Citizens. I’m among the 352,000 homeowners in Broward and Palm Beach counties stuck with Citizens because nobody else will write a policy for my 52-year-old home east of Interstate 95.
I don’t know how far east of I-95 Mayo lives or what condition his 52-year old home is in. I do know I live nearly 500 miles from Ft. Lauderdale in a home that’s only 20 years old with a new roof that cost $17,000 and I’m being assessed to help cover his household expenses. While I, and others among the vast majority subsidizing Mayo deserve to be upset, it would be a lot easier to swallow if he didn’t whine that it wasn’t enough.
I’m sure the vast majority of Palm Beach and Ft. Lauderdale heads of household, including those who can’t even afford homes, are with me on this. With the payment of every auto premium they grow less tolerant subsidizing coastal mansions.
Under the current Citizens 10% cap research shows Broward county receives over $62 million in implied subsidy from the rest of the state. Palm Beach nearly $58 million. And the disparity continues to grow, in part, because Citizens rate requests are less than 10% in most areas; ostensibly to help the Mayo’s of this world.
Doesn’t mean some people don’t deserve help. According to The Florida Catastrophic Storm Risk Management Center report, the problem with HB-1A was that it helped those who don’t need it at the expense of those who do.
Keep in mind, the self-fulfilling nature of Mayo’s prophecy. In southeast Florida he says there are no options besides Citizens. You think? Could it have something to do with opinions like his, that thwart Citizens rates from being about 50% higher, where they should be.
He blames insurance companies who left Florida or who don’t want to insure his home. But, why would they allocate resources, including expensive, non-refundable reinsurance premiums, to sell policies where the state insurer (with guaranteed solvency & better coverage) undercuts their rate by half? Not State Farm. Not Allstate. Not any company with a sane business model.
Next, in what is the epitome of non-sequitur, Mayo complains about those who complain. He calls them/us/you/me “free-market ideologues” who shouldn’t “demonize” Citizens, because; and, you’ll love this:
The company is profitable and healthy, with an estimated $5.6 billion surplus in reserve. That’s more than the combined reserves of all the other private property insurers in the state.
Okay, research isn’t Mayo’s forte. But, how much effort is needed to find out that about 1/3rd of Citizens surplus came from assessments on those it doesn’t insure. Why didn’t he mention that private carriers often reinsure 90% or more of their 100-year PML. How hard would it have been for a responsible journalist to simply mention that Citizens meager surplus pales against exposure of half a “TRILLION” dollars!
Despite all this, and testament to Mayo’s obvious penchant to “occupy”, he claims to trust the government insurer more “…than the untested upstarts and fair-weather giants in the private market.
Translation: “I enjoy Citizens subsidized lower premiums and better coverage whether I deserve it or not and regardless of who else it hurts!”
What a jerk!
Frankly, the Michael Mayo’s of this world may never care to see the light, but…wouldn’t it be nice if just once, instead of complaining about their allowance, they just said “thank you” for the car?
http://johnsonstrategiesllc.com/a-simple-thank-you-would-be-nice
