Wake-Up Call On Property Insurance

Published March 8, 2010

Paige St. John’s exposé on Florida’s nearly bankrupt property insurance system is a wake-up call for Floridians who depend on their insurance to restore their lives after catastrophic events.

The article noted how large insurance carriers are leaving the state, resulting in the emergence of small, Florida-only companies. State regulators and lawmakers have irresponsibly encouraged these companies to stretch their limited capital to cover more and more properties without shoring up their reserves, leaving many of them underfunded.

If some of these companies are barely able to cover individual incidents, what will happen when hurricanes hit? Why are these companies in such dire straits? And why are large companies leaving the state?

The reason is simple. Bureaucrats do not allow them to set their rates at a level where they are able to pay claims.

During the past three years, the Office of Insurance Regulation has changed focus. Instead of requiring insurance companies to raise and save enough money to pay claims after a storm, it has surrendered to the political whims of some lawmakers and the governor. This is also why large insurers have left.

Regulation should not be about government price controls. It should be about making sure insurance companies are financially healthy enough to pay claims so we consumers are getting what we are paying for.

Christian R. Camara

The writer is director of the Heartland Institute Florida Insurance Project, based in Tallahassee.