Florida’s Hurricane Insurance-Government in the Insurance Business

July/09/2009 17:21PM
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Want another example of what happens when government gets involved in the insurance business? Florida decided to get in the hurricane insurance business. Two years ago, Governor Charlie Christ, soon to be running for the U.S. Senate, gave property owners in Florida a big gift. Making Florida one of the world’s biggest property insurers. Called the Citizens Property Insurance Corporation it gives citizens market-rate insurance. The CAT, Hurricane Catastrophe Fund regulates how much private insurers can charge homeowners and requires companies to purchase low-cost reinsurance from the government.

Does any of this begin to sound familiar? Like the Obama Universal Health Insurance plan? So, how’s it working?

The state government acknowledges that the fund is vastly under insured. They say that in high-risk areas premiums are from 35% to 65% below what actuarial science says is sound. Too low for the big insurers to take a risk. So, what happened? Allstate, Nationwide, and most recently State Farm have withdrawn from Florida or have ceased writing insurance. Estimates say the state fund is an $18 billion underfunded liability.

What does the state do? They put forth revisions to reduce the risk everyone knows they can’t cover when the next big one hits. The governor vetoes the bill. He is pushing a federal disaster insurance fund. He knows he needs insurance to cover his ass. If passed, the rest of the country will pay for the liability the state plan can’t cover when it hits the fan.

Have you read all the warnings about the Federal Government getting deeper into the health insurance business? Medicaid is underfunded now and breaking state budgets. Medicare is broke. Like Florida, experts are worried that the Feds will drive all the present health insurance companies out of business. And, the budget will be woefully short, hence the competition was driven out by underfunded premiums.

Exactly what has happened in Florida. When the next big hurricane hits Florida they will be virtually broke, like California. Unless, Christ gets the Feds to step in and take over his mess. In which case, residents of Montana will be subsidizing cheap insurance in Florida.

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