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The Buzz

From the staff of the Tampa Bay Times

Crist's rep for risk

28

August

Crist1 Anybody notice that Charlie Crist's national press is no longer uniformly glowing? Take this snippet from a mighty relevant New York Times magazine cover piece on Wall Street's risk analysis for catastrophes:

"The disaster waiting to happen in Florida grows bigger by the day, but for a man running for governor of Florida, ignoring it is a political no-brainer. If he’s lucky — if no big storms hit in his term — he looks like the genius who saved Floridians billions in catastrophic-risk premiums. If he’s unlucky, he bankrupts Florida and all hell breaks loose, but he can shake down the federal government to cover some of the losses. "

A longer excerpt: "Then came Katrina. The reaction to the storm has put a fine point on Americans’ risk disorientation. The single biggest issue in Florida’s 2006 governor’s race, for instance, was the price of insurance. The Republican, Charlie Crist, got himself elected on the strength of his promise to reduce Floridians’ home-insurance rates by creating a state-subsidized pool of $28 billion in catastrophe insurance coverage. “Florida took this notion of spreading this risk and turned it on its head,” says one former state insurance commissioner. “They said, ‘We’re going to take all this risk ourselves.’ ” The state sold its citizens catastrophe insurance at roughly one-sixth the market rates, thus encouraging them to live in riskier places than they would if they had to pay what the market charged (and in the bargain, the state subsidized the well-to-do who live near the beach at the expense of the less-well-to-do who don’t). But if all the models are correct, $28 billion might not cover even one serious storm. The disaster waiting to happen in Florida grows bigger by the day, but for a man running for governor of Florida, ignoring it is a political no-brainer. If he’s lucky — if no big storms hit in his term — he looks like the genius who saved Floridians billions in catastrophic-risk premiums. If he’s unlucky, he bankrupts Florida and all hell breaks loose, but he can shake down the federal government to cover some of the losses.

[Last modified: Wednesday, September 15, 2010 2:00pm]

    

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