Opinion: Insurer gambles our money

Oct 26, 2012

The following article was published in Hernando Today on October 26, 2012:

Insurer Gambles Our Money

By Lloyd Brown


Some people are high rollers — when they are using your money.

In the case of hurricane insurance, they favor rolling the dice big time, and resisting an attempt to even the odds a bit.

Government-run Citizens Property Insurance was set up to be an “insurer of last resort.” But its rates are so low that it now has one of every four property-insurance policies in the state.

This is because it is not taking in enough money to build up a reserve that will pay the costs of a big storm.

Instead, the uncovered cost would be spread among everyone else in the state.

In other words, some family living in an apartment in an area far removed from the coastline could be subsidizing the cost of insurance paid by a millionaire living in a coastal home.

Reformers want to offer an incentive for other companies to take policies from Citizens. They would be required to charge the actual cost.

Liberals oppose this common-sense reform because they dread the prospect of someone, somewhere, somehow making a profit.

Liberals abhor profits. Maybe that is why liberal newspapers and magazines are going out of business. Businesses cannot survive without making a profit.

It is the pursuit of those profits that compels businesses to offer the best value at the lowest possible cost.

Citizens takes in about $3 billion in premiums yearly and faces the possibility of nearly $500 billion in claims from a big storm — which WILL hit eventually.

If it should happen to be next year, the damage would look small compared to the outrage from Florida residents when they see their car, home and business insurance rates soar.

There is wide agreement that the reform needs to happen now. Consumer advocate Walter Dartland said, “Doing nothing is not a reasonable option.”

Among the beneficiaries of below-market rates are the wealthy. There is nothing wrong with being wealthy, but it is difficult to justify keeping rates low for the wealthy at the expense of the state’s poor residents.

Paying the real cost for insurance might even encourage less development on the oceanfront. Environmentalists are in favor of that.

Those opposing the reforms that reduce the exposure are willing to keep rates artificially low today, rather than let the free market provide a solution, and bet that a devastating storm won’t hit until they are not around to blame.

The situation is too much like the federal government’s attitude of feast today and forget about famine tomorrow.

View the original article here:  http://www2.hernandotoday.com/news/hernando-news/2012/oct/26/haopino1-insurer-gambles-our-money-ar-544811/