June 28, 2007

Florida's insurance "fix" just keeps getting more and more broken. Earlier this year, legislative measures backed by Gov. Charlie Crist were supposed to reign in supposedly abusive practices by insurers (attempts to limit their exposure in a state beset by hurricane losses) and lower insurance rates. Well, the legislative fix so far has been disappointing, lowering rates for homeowners insurance a disappointing 10 percent or so, instead of the hoped for 30 percent or more. That hasn't worked, so Florida is now working on making its next insurance crisis: as Martin Grace points out at RiskProf, one problem is that developers keep putting more and more high-priced property where it is most likely to be damaged by hurricanes, and these properties are unlikely to be attractive to insurers, who have been dropping property policies in the highest risk areas. The result? The state-run insurer, Citizens Property, has to step in, taking on more and more risk. Where does this all lead to? No one knows for sure, but one thing is for sure: Florida will continue to pray to the hurricane gods.