July 27--Here's one idea for Gov. Scott in his campaign to reduce the cost of living in Florida: Forget about deregulating rates for Citizens Property Insurance Corp.
The Citizens board meets today in Miami, and once again will discuss the idea of unlimited premiums for new policyholders. Board member Tom Lynch, who owns a Palm Beach County insurance agency, said in an interview Thursday that he doesn't know why the proposal keeps returning. Chief Financial Officer Jeff Atwater, a former state senator from Palm Beach County, has told the board that the Legislature intended that the 10 percent annual limit on Citizens rates apply to all policies, not just existing ones. New Citizens President Barry Gilway opposes the idea. Said Mr. Lynch, "I think only one or two board members support it."
Unfortunately, the governor does. The supposed thinking is that uncapping rates would force people to seek coverage with a private company, thus reducing the size of Citizens. The supposed last-resort insurer is Florida's largest. Mr. Lynch explains why such thinking is faulty. Even if a Citizens policyholder gets an offer from a new private company -- which doesn't happen often -- he will be wary of leaving, because going back to Citizens would be so expensive.
And, of course, drastic, unexpected increases in property insurance would harm Florida's nascent real estate recovery. Not that the state's economic health matters to the private insurance companies. Our good friends at State Farm want a 50 percent-plus increase for rental properties, while Allstate -- known in Florida as Castle Key -- wants more than 30 percent. These requests come after six mild hurricane seasons, confirming that the deal on property insurance in Florida remains this: If we get storms, rates go up; if we don't get storms, rates go up.
Florida will not solve the property insurance crisis with one idea here and there, especially a bad idea like lifting rates on Citizens policies. "We just can't do that to the people," Mr. Lynch said. Resolving the crisis means discussing the whole system, from the models on which rates are based, to inspections for discounts -- a big problem for Citizens, as The Post'sCharles Elmore has shown -- to incentives for new companies, to a national catastrophic disaster insurance program.
Such a shift could begin with Gov. Scott acknowledging that the free market alone isn't the answer. He could start by opposing deregulation of rates for Citizens.
for The Post Editorial Board
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