For nearly 20 years, Florida tried to legislate its way out of a property insurance crisis. Unfortunately, for a long stretch, the fixes only made things worse. Citizens Property Insurance Corporation (Citizens), created in 2002 as a backstop for homeowners who couldn\u2019t find coverage elsewhere, kept absorbing more of the market, often competing with the private market. By September 2023, it had over 1.4 million policies, more than any private insurer in the state.<\/p>\n
That trend has since reversed, as a result of significant reforms, and the results are tangible. Citizens\u2019 policy count has fallen below 260,000, and its share of the state\u2019s admitted market has dropped to roughly 1.8%, the lowest in a quarter century. Litigation involving Citizens\u2019 own claims fell from nearly one in five in 2018 to one in twenty last year. Twenty-one new insurers have entered Florida since the 2022 and 2023 reforms passed, and the state\u2019s domestic carriers posted their best numbers in more than a decade last year. Additionally, regulators have not referred a single property insurer for receivership (where the state takes control of the company) since early 2023. This turnaround was not by happenstance; it followed a series of targeted reforms aimed at reducing litigation abuse, improving Citizens\u2019 role in the market, and making Florida more attractive to private insurers. Perhaps the most important boost to the success of those reforms was that the market was then given time to respond.<\/p>\n
These successes are exactly why now is not the time to consider what Democratic gubernatorial candidate David Jolly is proposing. Jolly wants to pull hurricane and natural-disaster coverage out of the private market entirely and place it in a new state-run catastrophe fund, one he says would need to grow to $30 to $40 billion. This multi-billion-dollar effort would be funded, in part, through new taxes or fees on insurers (and ultimately their customers), and by potentially redirecting existing tourist-tax revenues. In exchange, he argues, homeowners could see premiums drop by 60 to 70 percent.<\/p>\n
It seems like an appealing idea for a state where insurance costs remain a real burden. But Jolly\u2019s proposal is not a free-market solution, and it\u2019s certainly not free. A fund that size is built through a combination of new taxes, assessments, and years of premium collection \u2014 along with the hope of no hurricanes early on, borne by the same Florida families and businesses already stretched by high housing costs and property tax bills. Call it what it is: a hurricane tax, misguidedly framed as insurance relief.<\/p>\n
Florida doesn\u2019t need a hypothetical to know how that story ends. Washington has essentially run this experiment through the National Flood Insurance Program for decades, underpricing catastrophic risk and running up billions of dollars in debt to the federal government. Moving hurricane risk onto a government ledger doesn\u2019t make it cheaper. It just moves who eventually pays for it and takes market principles out of the pricing.<\/p>\n
The more important point is what Florida\u2019s own data shows about Citizens itself. Citizens is moving much closer to the role the legislature intended for it in 2002: to serve as an insurer of last resort rather than compete with the private insurance market. That is worth protecting, and it argues for the opposite of what Jolly is proposing. Rather than build a much larger, state-run insurer to replace the private market, Florida should keep Citizens focused on its original mission and resist policies that would allow it to grow back into a dominant insurer the next time the market tightens or a hard season hits.<\/p>\n
The 2022 and 2023 reforms are still working through the system. Years of litigation inventories don\u2019t go away overnight, and rate filings reflecting only post-reform data take time. Florida\u2019s leaders have been right to give the reforms time to work rather than layering new mandates every session. The lesson for Florida is straightforward: let the reforms continue to work and don\u2019t replace them with a new government-run system that puts taxpayers on the hook.<\/p>\n
Florida didn\u2019t solve its insurance crisis by nationalizing catastrophe risk. Instead, it removed the problems that drove insurers out of the state and then let competition do what competition does. That is the model worth building on; not one to trade for a government-funded system with an unknown price tag for Floridians.<\/p>\n
Doug Wheeler is director of the George Gibbs Center for Economic Prosperity at The James Madison Institute, a free-market research organization based in Tallahassee.<\/p>\n","protected":false},"excerpt":{"rendered":"For nearly 20 years, Florida tried to legislate its way out of a property insurance crisis. Unfortunately, for…\n","protected":false},"author":2,"featured_media":429374,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[483,28,30,29,482,109,76410],"class_list":["post-429373","post","type-post","status-publish","format-standard","has-post-thumbnail","category-florida","tag-commentary","tag-florida","tag-florida-headlines","tag-florida-news","tag-opinion","tag-social","tag-social-opinion"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/posts\/429373","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/comments?post=429373"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/posts\/429373\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/media\/429374"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/media?parent=429373"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/categories?post=429373"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/tags?post=429373"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}