Not so easy
The proposal by Republican candidate for Florida House of Representatives District 106, David Bolduc, to establish a state bank to address the state’s property insurance crisis, is interesting.
But it will only shift the problem to another underfunded government program.
Currently, the state owns and operates two insurance entities: Citizens Property Insurance Corp., which provides primary insurance coverage for 1.5-plus million homes and businesses in the state, and the Florida Hurricane Catastrophe Fund, which provides reinsurance coverage for the state’s property insurers.
Both these programs rely on post-event funding, meaning that they have to raise the money to make up any cash deficits after a hurricane. They do this by issuing bonds, which are repaid by assessments (taxes) on all Floridians’ policies over many years.
Bolduc’s proposal to establish a state bank to loan these entities the money instead of them issuing bonds does not address the underlying lack of the capital problem. With every last dollar of the roughly $70 billion in revenues allocated to running government, the state is unable to “loan itself” the billions needed to fill a Cat Fund shortfall.
In order for this concept to work, Florida would either need additional capital (dramatically more revenue) or created capital (ability to literally print money). Since neither is within the realm of possibilities, all this proposal would guarantee is yet another underfunded government program that would be propped up by hidden taxes.
And that brings us back to square one.
