You are underwriting insurance for 500 beachfront mansions worth a combined $2.6 billion.
If a big hurricane hits Florida and blows them down, you will be taxed to put them back together.
This is because the owners buy insurance from state-owned Citizens Property Insurance.
Citizens Property is proof that Republicans aren't opposed to all entitlement programs.
This one entails redistributing wealth from the center of the state to the coast.
Past attempts to correct this inequity have failed. But here we go again, this time with Gov. Rick Scott and state Sen. Alan Hays leading the charge.
Wish them luck.
Citizens is growing out of control.
The carrier is covering property worth $462 billion. We are on the hook for it because as Florida citizens, we own Citizens.
If it were a private carrier, it would have gone bankrupt long ago. Because it is not, it survives by our constant bailouts.
Gov. Charlie Crist made this bad situation much worse with his populist crusade to suppress insurance rates. He and Republican legislators froze rates charged by Citizens for three years.
Thereafter, they limited premium increases to 10 percent a year.
The result is that Citizens is woefully underfunded. To raise enough money to be fully solvent, Citizens would have to increase rates a whopping 56 percent. This means its customers are paying 44 cents on the dollar for their policies.
Consider this: Between 2004 and 2010, sinkhole claims have cost Citizens $867 million. Yet it has only collected $272 million in sinkhole premiums.
This is how the government conducts business.
Crist also politicized the Florida Office of Insurance Regulation, using it to suppress rates charged by private carriers. This created a market of highly leveraged companies, most of them losing money, with little cash on hand to pay claims. Many will blow away in the next big storm. Taxpayers will have to cover their losses as well.
This has caused a pent-up demand to raise rates, which hit with a vengeance last year.
There were 80 rate hikes. One in three companies obtained double-digit increases.
As a State Farm customer, I really got hammered.
Crist's ballyhooed insurance reforms did nothing more than hold down rates long enough for him to run for the next political office. Now that he's gone, the bill is coming due in huge lump sums. The very same insurance regulators who once rejected rates on Crist's orders now are approving them in record numbers.
The problem here is that many private carriers are getting much bigger increases than are allowed at Citizens because of Crist's 10 percent cap.
Citizens was supposed to be the "insurer of last resort'' for homeowners who couldn't get policies from private carriers.
But under Crist, Citizens became a competitor with private carriers. How can you compete with a business that can't go bankrupt no matter how little it charges?
This has caused the number of Citizens' policies to swell, heaping more risk on taxpayers.
There are bills pending in the House and Senate to fix this.
They would allow rates at Citizens to rise more quickly, up to 25 percent a year in the Senate bill and 15 percent in the House bill.
Both bills would require homeowners to buy insurance from private carriers if they can get it for 125 percent of what they are paying Citizens.
Coverage for homes valued at more than $500,000 would be phased out.
To expand the private market, the bills would give private carriers more freedom to raise rates while decreasing risk, particularly on sinkhole claims.
Creating a bailout-free insurance market will be hugely expensive, particularly for Citizens' customers.
Alan Hays has little sympathy.
"We have 85 percent of people subsidizing 15 percent of the market, and a lot of that property is high-value coastal property,'' the senator says.
All this is nothing new. In 2006, in Jeb Bush's last year as governor, legislators approved similar reforms. I predicted that once everyone understood how this would raise rates, the reforms would be tossed.
That happened under Charlie Crist.
And so, look for South Florida legislators to try to weaken these measures.
We will see how serious Republicans are about entitlement reforms.
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