Examine trust fund proposal

Aug 21, 2006

Dan Gelber

South Florida Sun-Sentinel


Each week, thousands of homeowners get the news that they are either being dropped by their insurance companies, or their premiums are skyrocketing. Unaffordable hurricane insurance premiums are forcing as much dislocation and pain as the hurricanes themselves. For many, the real threat of this expense may be the loss of a home or lowering their standard of living. Most acutely affected are everyday Floridians on fixed incomes.

The recent harsh winds are only part of the problem. Much, in fact most, of the blame falls on Republican politicians who created a dysfunctional windstorm market that favors insurance companies over homeowners. The system has its central piece the state-run insurance pool known as Citizens Property Insurance Corp., which gives insurance companies a place to send their worst policies. By law, Citizens must charge its customers a rate higher than the rates available in the private market.

Private insurance companies absolutely love the Republican windstorm system. They can abandon policies by the thousands without worrying that their customers will be picked up by a competitor.

There is a better way. We need to eliminate Citizens, and instead, have the state provide a minimum level of windstorm coverage to every Floridian needing insurance through a premium financed hurricane trust fund. These policies will protect up to a certain value of potential loss, and individualized premiums will be based upon the property's risk rather than just be comprised of high risk accounts, this state layer of insurance will include both good and bad risks and, unlike private insurers, won't have to pay taxes or make a profit.

In the immediate past legislative session, the Republicans would not even give this proposal a hearing. That is because the Republican-controlled Legislature has developed a symbiotic relationship with the insurance industry. Every Republican effort to address the issue brings the same boilerplate proposals: (1) allow insurance companies to charge more and make more profits or (2) walk away from homeowners leaving them stranded with, you guessed it, Citizens.

That is exactly what the Republicans did in the last legislative session earlier this year when they actually reduced insurance regulation over the industry.

The good news is that the Republicans are now scared. The bad news is that they think they can skate past this election season by merely acting concerned. They may be right. The governor just convened a "special commission" whose primary purpose is to give voters the impression they are really worried about the maddening insurance premiums.

Of course, none can explain why the Republican-controlled Legislature and the entire Republican Cabinet did nothing during the last six legislative sessions except satisfy the demands of the insurance companies. Look for them now to come with some plan to send you a little cash, which they will call "rebates," that will be nowhere near the amount of your premium increase.

Perhaps, by chastising my colleagues on the other side of the aisle, I am taking too strong a partisan position, but as they party in power, they need to be held accountable for their failure. This crisis demands that he governor call a special session of the state Legislature and lock the doors until real answers are provided.




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