Citizens: An Approaching Storm?

Published August 26, 2008

Florida is being caught up in an insurance quagmire of its own design. Since 2002, Floridians have become increasingly reliant on Citizens Property Insurance Corporation, a state-chartered company meant to be the insurer of last resort for those who could not afford insurance in the private market. Citizens has since grown into a behemoth, the tenth largest insurer in the nation, while private insurers have stagnated or left the state.

This situation arose as a direct result of mismanagement by the state Office of Insurance Regulation (OIR) and Governor Crist’s alienation of large private insurers. The end result is a woefully uncompetitive market where Citizens dominates, increasing the strain on the catastrophe fund, and a system where the costs of added risk are redirected to insurance holders across the state through assessments (“Have we overcorrected and created a threat?” August 24).

Despite the claim by many in Tallahassee that the market is improving, the new private providers that have emerged in recent months are still hampered by excessive regulation and reliant on the same catastrophe fund as Citizens. Ironically, the companies that could best address the needs of Floridians—large providers, like State Farm and Allstate, that can offset the high risk of Florida’s hurricane region through less-risky customers elsewhere in the country—are the same companies that are being attacked by Crist and the OIR.

The correct path to sustained growth in the insurance market is deregulation and the opening of Florida’s market to competition, not a continued reliance on Citizens.

Matthew Glans ([email protected]) is a legislative specialist for The Heartland Institute.