Welfare scheme (Letter to the Tampa Tribune)
Proposals to decrease the size of Citizens Property Insurance Corp. by transferring some of its surplus funds to private insurers in exchange for assuming policies may seem like “corporate welfare” (“Citizens Property’s ‘corporate welfare’ carrot,” Other Views, Aug. 17).
However, if private insurers agree to cover those policies at the same actuarially unsound low rates that Citizens does, there has to be a source of funds to pay for any potential losses. If there are no losses, the insurer would reimburse those funds to Citizens over a few years.
The current system is a far greater welfare scheme: 77 percent of Florida homeowners assume a significant chunk of risk belonging to the 23 percent who are covered by Citizens and enjoy paying a lower rate insufficient to cover their risk. This is in addition to the businesses, charities, religious institutions, automobile policyholders and local governments and school boards that purchase private insurance and are also are subsidizing Citizens’ policyholders.
The risk the “77 percenters” and the other non-Citizens policyholders assume is essentially an enormous sleeping tax that will awaken the day Citizens finds itself without enough money to pay claims after a bad hurricane. Moreover, private insurers in Florida receive cheap reinsurance coverage by the state-run Florida Hurricane Catastrophe Fund, which is also subsidized courtesy of Florida taxpayers.
Government should not be in the business of forcing people to subsidize other people’s risk. More of it should be transferred to the private sector, and Citizens, like every company, should charge enough to pay its own claims so the rest of us don’t have to
