Editorial: State faces insurance disaster

Aug 4, 2009

As Florida heads once again into the high-risk hurricane months with too little property insurance coverage, the state needs action from its public officials.

State Farm, with 770,000 property insurance policyholders, is still trying to exit the business in Florida.

A bill passed by large majorities in the Legislature this year but unwisely vetoed by Gov. Charlie Crist might be resurrected, but not before October if there is enough support to override Crist.

That legislation would have allowed State Farm and other big insurers to increase their rates on homeowner policies to whatever the market would bear.

That might have brought more desperately needed insurance capital to the state, where a catastrophic hurricane would devastate the overexposed state-backed insurer, Citizens Property Insurance. That would leave taxpayers and Citizens rate payers on the hook for big levies to cover losses.

Meanwhile, cash-strapped Citizens, with 1 million policyholders, is limited to a 10 percent rate increase this year.

The new insurance companies that have emerged in recent years to help cover the state’s property are not writing much in the way of policies for the average homeowner.

The Legislature needs to act as quickly as possible to give Citizens increased rates and to allow State Farm and other heavy hitters to charge the market rates necessary to get them writing new policies.

That means overriding Crist’s veto of the Consumer Choice insurance bill ASAP.

Beating down the rate increases following the brutal storm years of 2004 and 2005 proved unsuccessful for state government.

Florida is dangerously exposed to hurricanes. It needs abundant storm insurance.