As Floridians check their supplies and evacuation zones at the start of another hurricane season today, let's hope our luck holds and remain optimistic. It's been seven years since Florida has been hit by hurricane; the state-run Citizens Property Insurance Corp. is in better financial shape; and the Legislature avoided making it any harder on homeowners. But there is no substitute for preparing to endure a major storm — just in case.
The trend lines for Citizens are running in the right direction. The insurer still is the largest in Florida with more than 1.2 million policies, nearly a quarter of them in the Tampa Bay area. But that total is down more than 200,000 from a year ago as more private companies are willing to take on more risk. Citizens also has a record surplus of more than $6.4 billion and more competent leadership than it had a year ago. The insurer has enough capital to pay off claims from a 1-in-58-year hurricane without assessments after the storm.
That hasn't stopped the fear-mongering or the efforts to raise premiums and reduce coverage. Legislators and private insurers warn of a "hurricane tax" — large assessments after a 1-in-100-year storm. The Florida Senate was determined to remove the 10 percent cap on premium increases at Citizens at least for new policyholders. Fortunately, the House resisted and the compromise Gov. Rick Scott signed into law Wednesday retains the premium caps and offers some reasonable changes. It also creates a clearinghouse that would make it easier for homeowners to find better coverage from private insurers at more competitive prices before signing up with Citizens. That could result in shifting another 200,000 policyholders from Citizens into the private market.
Yet Citizens is its own worst enemy. First it reduced coverages. Then it further angered policyholders with a poorly run reinspection program that significantly cut premium discounts for hurricane hardening efforts that had previously been approved. Last week, the Citizens board foolishly agreed to pay a St. Petersburg start-up, Heritage Property and Casualty, up to $52 million to take up to 60,000 policies. That is a misuse of money and violates the intent of the Legislature, which rejected Citizens' plan last year to loan private insurers hundreds of millions of dollars to take out policies. House Speaker Will Weatherford is understandably critical and has ordered a legislative review.
In the long run, Florida needs a better solution to its property insurance issues. Name-brand national insurers still refuse to write new policies, and the state's record of propping up in-state start-ups is spotty at best. But there is no traction in Washington for a national catastrophe fund or in Tallahassee for creating a state fund that would collect windstorm premiums in return for private insurers covering everything else and assuming all Citizens policyholders. Private market forces are not working, and jacking up Citizens' rates as the economy is recovering is not the answer.
Floridians can't let the philosophical debate over insurance or the state's good weather fortunes distract them from practical preparations. Today is the day to remember to gather hurricane supplies such as batteries and portable lights, find the weather radio and review evacuation plans. The state has been on a winning streak, and it won't last forever.