WASHINGTON (Feb. 3, 2017) – Florida is unusually well-positioned to enact reforms that would address the artificial cost inflation created in the state’s property insurance and workers’ comp markets, according to a new report authored by R Street Senior Fellow Christian R. Cámara and published by the James Madison Institute.

“High insurance rates are appropriate when they reflect actual risks. However, it is apparent that the rate increases Floridians are being faced with in both the property and workers’ compensation insurance realms stem from practices, behaviors and even cottage industries born out of vulnerabilities in the law exploited by bad actors,” Cámara writes. “In short, the cost drivers stem from the very laws that govern those insurance products. This should concern state lawmakers, as property insurance and workers’ compensation insurance are both regulated at the state level.”

Earlier property insurance reforms undertaken by the Legislature and the then newly elected Gov. Charlie Crist in 2007 sought to suppress rate increases artificially, but only exacerbated the state’s shaky market. A recent lull in hurricane activity and a flood of investment into the reinsurance and catastrophe bond markets since 2008 have helped the state recover, but abuses in the assignment-of-claims process have meant rates haven’t fallen as they should have. Recent court decisions also have rolled back landmark workers’ comp reforms the state made in 2003.

“Given Florida’s streak of combined luck from Mother Nature and the global markets, the 2017 legislative session offers state lawmakers an enormous opportunity to enact insurance reforms needed to address cost drivers that are needlessly driving up rates, while also strengthening the state both financially and physically ahead of the gathering storm,” the author concludes. “Doing nothing will guarantee higher costs on employers, which will undermine the job gains Florida has made in recent years.”

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