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Political Diary: Florida Hurricane Flub

3/11/2013

By: Mary Kissel

Wall Street Journal

Florida's state legislature wrapped up its annual session Friday, and to their credit Republicans beat back GOP Gov. Rick Scott's plan to expand Medicaid. But when it came to the state's fiscally shaky, taxpayer-backed insurers, the session wasn't such a success.

For three years running, reform-minded Republicans like Boca Raton state Rep. Bill Hager have tried to pare back state-run Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund, a reinsurer. Why? Former Gov. Charlie Crist used a string of destructive hurricanes as a pretext to expand both insurers beyond their means in 2007 and run private competitors out of the state. Floridians were left on the hook if a big wind blows.

And they still are. This year Cat Fund reform died early in the legislative session, despite Republican control of the governorship and both state houses—and testimony from State Insurance Advocate Robin Smith Westcott that the reinsurer didn't have to raise rates to shore up its books. On the Citizens front, the Senate at least considered a bill that would have allowed the insurer to move to actuarially sound rates and offload more risk to private reinsurers. Citizens' own estimates show the insurer can't meet its claims in the wake of a major storm.

Cue the horror from Miami-Dade Republicans Frank Artiles and Jose Felix Diaz, who put their own political interests above those of taxpayers. The two hurricane-prone counties account for Citizen's highest-level of exposure (some $96 billion of the total $429 billion as of December 31), and cheap rates are popular. So the duo cooperated with Democrats to stop Citizens from pricing risk properly and reviving the private market. Mr. Scott didn't lift a finger, fearing demagoguery from Mr. Crist, who may challenge him for governor.

So the legislature whooped through a bipartisan bill Thursday that doesn't raise rates and won't do much to bring private insurers back to the state. The one marginal reform was to lower Citizens' maximum policy to $1 million from $2 million. But that will come as cold comfort the next time the Sunshine State gets hit with a big hurricane or a series of small, destructive storms, and Floridians have to reach into their wallets to bail out insurers that Tallahassee Republicans had literally years to fix.