The Office of Insurance Regulation announced today that State Farm will remain in Florida, raising rates and non-renewing 125,000 policies. Analysts at The Heartland Institute say the plan shows the state's efforts at heavy-handed regulation have failed.
"Since 2007, state government has unleashed an assault on Florida's property insurance system through anti-market policies, onerous regulations, and even hostile, demagogic rhetoric from Gov. Charlie Crist himself," said Christian Cámara, director of The Heartland Institute's Florida Insurance Project.
Since Crist's 2007 reforms, nearly all major, nationally recognized insurers have stopped writing new homeowners' insurance policies in coastal areas of Florida. Roughly half of the state's insurers (102 of 201) are currently losing money, and special taxes imposed following a hurricane could cost about $20,000 per household.
"With this flawed insurance experiment in collapse, the Office of Insurance Regulation now seems to recognize the importance of maintaining private claims-paying capital in Florida by making certain concessions to keep the state's largest insurer from leaving altogether," said Cámara.
"Although this is positive news," Cámara added, "it does little to change the fact that Florida's property insurance market is continuing to crumble and will continue to do so unless the state enacts sweeping, market-freeing reforms and bids 'good riddance' to Gov. Crist's failed socialist insurance model."
Eli Lehrer, director of The Heartland Institute's Center for Risk, Regulation, and Markets, says Florida needs to engage in market-freeing reforms all over the state.
"If it wants to make sure that Floridians can buy good, sound, private insurance policies from a wide variety of carriers, the state needs to repeal its onerous regulations, encourage increased property mitigation, and phase out the state-run portions of the market," Lehrer said. "This is a small victory for Florida's consumers, but the system still needs wholesale reform."