Pociask on Florida’s missed opportunity
Writing at the Sun-Sentinel, our friend Steve Pociask of the American Consumer Institute reminds Florida lawmakers of the opportunity they missed out on during this past legislative session to take advantage of falling reinsurance rates to lay off more of the risk presented by its state-run insurer and reinsurer.
While the Legislature did manage to pass a reform bill that lowers the maximum Citizens policy from $2 million to $700,000 and also includes an R Street proposal to bar insurance subsidies for new construction in environmentally sensitive coastal regions, they neglected to do anything to shrink the Florida Hurricane Catastrophe Fund, despite the unique opportunity the current soft reinsurance market allows. A July report by broker Willis Re showed that rates were down by as much as 25 percent on some Florida property catastrophe accounts. That suggests a significant amount of risk could have been shifted to the private market without seeing any significant increase in primary insurance rates.
As Pociask put it:
Florida should undoubtedly be moving toward the creation of a sustainable property insurance market that is not dependent on bond debt and “hurricane tax” assessments that force 79 percent of Floridians to pay for those most at risk. The state should continue on the path of reducing the size of Citizens and the burden it imposes on all homeowners, and to ensure that wealthy individuals living on the coast cannot purchase insurance from the “insurer of last resort” at the expense of the majority of Florida consumers. More work needs to be done.
