Miami Herald – Opinion
There’s enough blame to go around for Florida’s insurance crisis, but not where you think | Opinion
Robert Sanchez – July 24, 2023
There have been many good reasons to criticize Gov. Ron DeSantis, especially during his second term, but Florida’s property insurance crisis is not among them. It’s a problem that has festered for years and began long before DeSantis came along.
Even so, Florida’s increasingly desperate Democrats tried to blame him and his fellow Republicans last week after Farmers Insurance abruptly announced that it would be reducing its risks by scuttling thousands of policies.
The Farmers move occurred in a state where more than a dozen insurers have recently gone broke, and where others are selectively non-renewing some of their policies, especially for properties in high-risk areas such as barrier islands.
The burden of providing coverage has fallen upon Florida’s “insurer of last resort,” the state-owned Citizens Property Insurance. Now it’s being forced to raise its own rates lest it become insolvent after the next major natural disaster.
Seeing the insurance problems as a political opportunity, Democratic Party Chair Nikki Fried, noting the obvious that Florida’s insurance premiums are “through the roof,” declared that the situation is “totally unacceptable,” and complained that solutions proffered by legislative Democrats “have gone completely unheard.”
Meanwhile, one of Democrats’ legislative leaders had an especially far-fetched notion of what to do to fix the state’s otherwise intractable problems, which are contributing to premiums way above the national average: Her suggestion: Let the insurance commissioner be elected rather than appointed.
That was a solution suggested by House Minority Leader Fentrice Driskell, D-Tampa. She was a 19-year-old Harvard undergraduate back in 1998, when Florida voters resoundingly approved amending the state Constitution to shrink the elected Cabinet and, among other changes, have the insurance commissioner be appointed rather than elected.
It seems that voters had noticed that running a statewide political campaign in a state the size of Florida required tons of money. When candidates for insurance commissioner ran, lots of that money came from — surprise! — the insurance industry itself, including the companies, brokers and agents. Moreover, the successful candidates sometimes had more political skills than useful insights into insurance issues.
As for realistically addressing the underlying factors causing Florida’s property insurance crisis, some of them are — and will remain — beyond the capability of any governor, legislator or insurance commissioner to address.
For instance, to the extent that natural disasters are factors in Florida’s higher rates at a time when forecasters expect windstorms to be more frequent, intense and destructive, no public official — whether elected or appointed — can do much to change the geography of a peninsular state bounded by the warming (and rising) waters of the Atlantic and Gulf.
This has not escaped the attention of the global reinsurance companies, which provide insurance for insurance companies. As a result, they’re charging higher rates to the insurance companies, which pass them along to Florida’s property owners.
Another major factor contributing to the higher rates is inflation. The costs associated with repairing and/or replacing damaged properties have soared, arguably more so in Florida than in other states because Florida’s population surge has outpaced the housing supply, driving up property values.
This came atop generalized inflation throughout the economy as a factor in higher insurance rates. For that, President Biden and Gov. DeSantis could jointly take a bow.
Inflation surged worldwide in part because the Biden administration’s energy policies and profligate spending drove up prices, and Putin’s attack on Ukraine added to the problem.
DeSantis’ short-sighted stance on immigration is causing an exodus of some of the migrant workers who will be needed in the next rebuilding effort. The labor shortage will cause delays and inevitably increase costs after the next big storm.
So, if Florida can do little about the intractable insurance problems related to weather, the reinsurance market or inflation, is there anything left that the state could or should do?
Yes, and the 2023 Florida Legislature did it by enacting a law to end “assignment of benefits” and other kinds of abuses practiced by some of Florida’s politically powerful personal injury lawyers.
DeSantis signed the legislation into law, but just before it took effect the personal injury attorneys filed more than 70,000 lawsuits that will be handled under the former rules, which were favorable to the plaintiffs.
Therefore, this constructive step won’t have an immediate impact, and its long-term impact remains to be seen. Meanwhile, as Florida’s property owners and other residents warily monitor the approach of the busiest portion of the June 1-Nov. 30 hurricane season, they might try resorting to the tactics recommended after each mass shooting: thoughts and prayers.