What’s that sound I hear in Florida? Could it be the clunk, clunk, clunk of lawmakers throwing aside their wingtips and pumps as they lace up their Keds and get ready to run for the tall grass? Perhaps. Because remember those insurance reforms? They ain’t workin’. And, lawmakers, I’ve got worse news for you — folks are starting to notice, and they are not happy.
Florida Gov. Charlie Crist and legislators promised they had a sure-fire recipe to bring down rising property insurance premiums in the state: two cups of demagoguery, five cups of increased regulation, four tablespoons of voodoo economics, two lucky rabbit’s feet, a four-leaf clover, a dash of balderdash, a pair of blinders, mix well with two quarts of unacceptable risk to the taxpayers, and pour into — what else — a crock pot. Let simmer for six months to one year until it explodes, then blame it on the insurance companies.
This Miami Herald story is priceless. There’s so much in it I hardly know where to begin, so let’s start at the start:
Seven months after Florida lawmakers expanded the government’s role in the state’s insurance market, rates should be lower and insurers should be willing to write more policies.
Just the opposite is happening. What went wrong?
Legislators themselves are stumped but are acknowledging they should never have pledged such big savings to homeowners. They say reforms need more time to work. But some wonder whether government should take even a bigger role in the insurance market — possibly taking over all windstorm coverage, for example.
What was that Clausewitz had to say on this subject? Oh yeah, "Never reinforce failure."
This has got to be terrifying to the average Floridian. You’ve got a bunch that promised big, can’t deliver, can’t explain why they can’t deliver, but now they want to double down on the same failed policies. Wow, these guys are like compulsive gamblers who can’t stop yanking back that handle. The next pull is sure to bring the jackpot. Let these guys create another state-run insurance company? I haven’t heard an offer that good since this guy I knew as a kid got out of jail and hit me up to co-sign his loan for a new Cadillac.
As the Herald story says, the centerpiece of Florida insurance reform was supposed to be the expansion of the state’s CAT fund to $28 billion, so part of the money could be used to issue cheap reinsurance to insurers, thereby reducing their cost of doing business and allowing them to drop premiums. Right, except for one thing — no one believes the money will actually be there, because lawmakers also took the state-run insurer, Citizens Property, and shot it up full of steroids.
Citizens no longer has to have higher rates than the market, and is attracting new customers by the tens of thousands — it has 1.3 million policyholders and growing. Yet lawmakers also bar Citizens from charging an actuarially sound rate, meaning the money in the CAT fund may go first to bail out Citizens and won’t be there for insurers to use as reinsurance money. That makes insurers a little weak in the knees, and it isn’t because they’ve been bitten by the love bug.
I like the quote from Sen. Bill Posey: "You can’t turn the Queen Mary around on a dime. This is a big ship and it will take time." Hang on a minute, wasn’t it last week or so that Gov. Crist said, "We have turned the ship"? Has the ship been turned or has it not been turned? Maybe Crist meant it has been turned, but in the wrong direction. Dang, can you fellas get your stories straight and let me know when you do? You know, there are a lot of cliches involving ships, what is the next one that will be used: "like rats deserting a sinking ship"? Only time will tell.
Oh, and I almost forgot: here’s a story by John O’Brien of Legal Newsline, in which I’m quoted, about Florida wanting federal money, in the form of a national catastrophe fund. Yowza, Yowza, Yowza. Yeah, I can see that, that’s a good reason for a national CAT fund, because those jokers in Florida want one. I mean, should we hold it against them that they’ve made a lot of bad choices so far? Shouldn’t we stay positive, hope for the best and go along with it? If you say yes, e-mail me with your phone number, I know a guy who’s still looking for someone to co-sign for that Caddy.
UPDATE: I liked this post from the Merlin Law Group, in Florida, on the problems associated with Citizens Property. This is a really good, lengthy post. You know, this firm has a pretty good blog, they ought to consider having the author of a post sign his or her name instead of attributing it to the firm. With rare exceptions, my name has been on everything I have ever written, including briefs I worked on as a first-year associate. Writing is hard work, and I take a lot of pride in it — so anyone who has ever tried to diminish my credit for it has heard my statement that this will not stand, this statement varying in tone and bluntness by my analysis of whether the person was simply misguided or was in fact malevolent.