Policy Documents

Property Insurance Solutions to Protect Homeowners, Taxpayers, and Florida Government from Financial Devastation

Eli Lehrer –
March 8, 2010

As the United States deals with a global financial crisis, Florida stands at the maw of a deep fiscal abyss of its own making. Despite a series of regulatory changes made during 2009 served to improve and stabilize Florida’s property insurance system, the environment in which Floridians buy insurance for their homes remains one of the nation’s most politicized and financially threatening. Political decisions made over the course of several decades have artificially lowered property insurance rates for homeowners in high-risk areas while simultaneously exposing the state’s taxpayers to massive liabilities if a single major hurricane were to hit one of the state’s heavily populated areas.

Although much work remains to be done, many of Florida’s elected leaders appear to have realized the peril that Florida faces and have begun working to limit it. Two major bills that overwhelmingly passed the Legislature during the during the 2009 session — one of which Governor Crist vetoed – represented efforts to move the state in the right direction and allow rational economics to play a larger role in the provision of property insurance. Political leaders outside of the Legislature, including Florida’s Chief Financial Officer Alex Sink, have also taken up the mantle of market-based reform and have called for stable, sustainable public policies related to insurance.

During its 2010 session,the Florida Legislature could build on the progress it made during 2009 by continuing efforts to revise the state’s laws and reduce the state’s fiscal peril. This paper aims to explain why and how the Legislature and the state’s other elected leaders might go about doing this.