Florida officials and the Legislature have tried several different ways to push policy holders out of the state-run Citizens Property Insurance.
They have raised rates, reduced coverage, even offered to lend private insurers $350 million to encourage them to take on new customers.
Those efforts have largely failed. Citizens announced recently that it will close the year down only 9 percent from a record high number of policies, and that it was suspending the controversial loan program.
Maybe it's time to try something more practical: Require private insurers to meet financial standards that would make them at least as reliable as Citizens.
With 1.34 million policies, including 90,000 in Sarasota and Manatee counties, Citizens remains Florida's largest property insurer. Gov. Rick Scott and legislative leaders cite the potential financial risk to the state if a major hurricane strikes and Citizens can't pay its claims.
But a report this year by the state's Office of the Insurance Consumer Advocate found that numerous small, undercapitalized private insurers operating in Florida would be "as much or more of a financial risk" than Citizens in the event of a hurricane.
It doesn't take a hurricane.
And it doesn't take a hurricane for insurers to collapse.
Florida hasn't been hit by one in seven years, but, as the Herald-Tribune's Zac Anderson has reported, in 2011 Tampa-based Homewise Insurance became "at least the eighth Florida property insurer to become insolvent since 2004" -- the 11th if you count multiple insurers under one holding company that failed.
As a result of the Homewise failure, all insurance policy holders statewide face a 1 percent rate increase next year -- an average of $20 per homeowner -- to cover the insurer's $142 million in unpaid claims.
As the Herald-Tribune's 2011 Pulitzer Prize-winning series showed, Florida's insurance regulators not only permit private insurers to carry dangerously low reserves but encourage them to take on more policies than they can safely cover.
Major insurers, which began to pull out of Florida or reduce their exposure after Hurricane Andrew struck in 1992, have shown no inclination to expand coverage. The lack of available, reliable coverage led the Legislature to create Citizens in the first place.
Failure to meet requirements.
The state's latest effort to increase the private market's share was the plan to have Citizens lend $350 million to smaller insurers to encourage them to take homeowners' policies from the state-run program.
Under the plan, private insurers would receive 20-year loans of up to $50 million when they assumed policies from Citizens. The insurers would have to keep those policies for at least 10 years and could not raise rates by more than 10 percent for the first three years.
But critics pointed out that the loan program would drain Citizens' large surplus -- built up during the hurricane-free years, and through the rate hikes and reduced coverage -- and limit its ability to withstand a major hurricane, with no guarantee that the loans would be repaid.
To its credit, the Citizens board of directors agreed to hire outside auditors to review the proposed program. The auditors are expected to make recommendations early next year.
That Citizens officials decided to suspend the loan program, at least until the auditors make their report, is another potentially promising development.
Citizens President Barry Gilway said, after discussions with insurers interested in taking the loans:
"I seriously doubt even if the ... program would proceed that we would have any real takers that meet the financial requirements that we believe would be necessary."
The companies' failure to "meet the financial requirements" is yet another indication that the state needs to focus not just on lowering the number of Citizens policyholders but on raising the standards for private insurers in Florida.