SunSentinel.com
By Antonio Fins
October 12, 2011
So, I was feeling pretty good about Florida escaping — so far — a crushing hurricane for the sixth straight season.
Then the insurance industry analysts showed up for an editorial board meeting on Tuesday. And the good feelings kind of evaporated.
The gist of the hour and 45 minute discussion: Even with our good luck, we’re still out of luck on getting successful reforms to straighten out the private insurance market left in tatters by Charley through Wilma in the middle of the last decade.
For example:
Citizens keeps growing because large firms — ahem, State Farm — keep dumping policies. And the start-up competitors, which we’ve hung our hats on as saviors, can do no more than simply soak up a fraction of the policies the not-so-like-a-Good Neighbor is unloading.
Oh, it gets worse. As Citizens grows, its vulnerability — and the exposure of all Florida policyholders — grows too. So, a storm season with, say, $20 billion in losses, could trigger more than $1 billion worth of extra assessments on Citizens’ customers.
Don’t laugh if you are not a Citizens customer. Because non-Citizens policies would get socked with more than $5.5 billion in assessments.
Nice.
So, here’s an idea I floated some time ago — during the 2006 elections for Florida Chief Financial Officer, to be precise. Change Florida law so that the only requirement in hurricane coverage is to cover your home’s roof and walls, not its contents. Contents insurance would require a separate policy.
Do that and premiums will drop.
Now, the insurance people we met with today say this already in practice, though it’s not so widespread. Maybe so, but changing the law to force a separation would make this difference more prevalent.
And it would force Citizens — which isn’t separating coverages — to do so too.
