Walsh: What will the geniuses do next?
Florida's business leaders need to visit the governor and wake him out of his populist stupor.
If only every legislator in Tallahassee had read the front-page teaser in the Sarasota Herald-Tribune two weeks ago before jumping off the insurance cliff.
The irony is too funny.
Here they are crafting laws to dig themselves deeper into the insurance-industry hole while up in Washington a similar government insurance "achievement" is about to tank.
Lord help us. They all can't be that dense, can they?
We know at least two of our Gulf Coast legislators are not so dumb to think the Legislature's recently passed insurance "reform" was actually reform or the right thing to do. One of them, whom shall remain nameless, told us before the special session he was opposed to what was about to happen. "There's no stopping this train," he said. "But if anyone votes against it, his political career will be over. He'll be hanged as anti-taxpayer, anti-consumer and pro big insurance. You can't win."
That in itself is disappointing - that lawmakers who know better than to support bad laws don't have the courage to stand on principle. But that's a topic for another day.
The issue at hand is what occurred this previous weekend at the special legislative session in Tallahassee.
For starters, based on what was accomplished, there never should have been a special session. The results would have made no difference if they were adopted now or adopted in May. This was merely Gov. Charlie Crist and Speaker Mario Rubio grandstanding for accolades from the 45% of the electorate who believe government can cure their runny noses and everything else. Indeed, it was stomach-turning to see all of the legislative sycophants standing together in front of the television cameras proclaiming their great victory for Florida residents.
They thought they did us good. And they were serious!
So let's see if we get this right:
The Legislature and its attendant bureaucracy in Tallahassee are the very people who are so good at running an insurance company that they managed to give us a state-owned corporation that lost $1.8 billion in 2004 and $1.9 billion in 2005. And, they gave us the laws that resulted in this state-owned insurance company becoming the largest property insurer in the state and the only place for most of us to buy property insurance.
These same legislative geniuses have now decreed that their state-owned, non-tax-paying company should sell even more lines of insurance and compete against all of the privately-owned insurance companies, which, of course, are forced by Tallahassee to pay taxes to feed the insatiable bureaucracy that oversees the operations of this state-owned insurance company and meddles beyond comprehension in the private sector.
This is the same legislative body that, in its great wisdom over the past 15 years, has turned the Florida property insurance market into such a disaster that we are where we are.
And we should be celebrating and patting these brilliant boobs on the back?
Raping the taxpayers
The newly approved laws will rape American and Florida taxpayers - yes, rape. That's essentially what it is. Federal and state lawmakers have designated $300 million more to be used like free money for people to make their homes less susceptible to storm damage. Good intention, but it's still taking money from one person's pocket and giving an unearned benefit to another - to people who voluntarily live in high-risk places. Why should they be rewarded with free money?
On top of this, Florida lawmakers have decided to sell taxpayer-backed reinsurance to insurance companies at prices lower than market prices. Charging below the market sounds like a great strategy, but everyone knows it's a losing one. And to compound this, lawmakers have saddled Florida taxpayers with a huge risk - committing taxpayers to be taxed for up to $28 billion in storm damage once insurers hit a state-set limit.
And just to exacerbate things even more, lawmakers now say insurers must sell homeowners insurance in Florida if they want to sell auto insurance. The effect of this, of course, will be a tighter supply of auto insurance, higher prices.
Florida lawmakers are living in a delusional fog when they get to Tallahassee. They need to look around at such states as Illinois, Idaho and Missouri. They need to go on the Internet and read the Insurance Information Institute Web site.
The trends are heading in the opposite direction of Florida, as noted in the box above. States with less government intervention in the marketplace have healthier, more competitive insurance markets.
At some point Gov. Charlie Crist and his colleagues in Tallahassee need to awaken to this and embrace it. Crist told a reporter last week "I'm a less-government guy, but we have an obligation to do everything we can for the people of Florida."
The only thing he hasn't tried is what should be obvious: For 15 years, ever since the state injected itself into the Florida property insurance market after Hurricane Andrew, the state's competitive supply of insurance has shrunk and the market has dwindled in the number of insurance carriers.
How much longer will it take for the Tallahassee populists to realize what they must do?
Here are a few ideas to push them along:
• The Florida Council of 100 - a group of the state's top CEOs who act as an adviser to the governor - and a coalition of the leaders of the largest business organizations (i.e. Florida Bankers Association, Florida Homebuilders Association, the Florida Chamber, National Federation of Independent Business, Associated Industries, and on and on) should be on his doorstep with a convincing effort that he must move Florida to an unregulated insurance market. We cannot wait for the next Andrew.
• Likewise, he and lawmakers must begin the process of privatizing or selling Citizens Property Insurance. There is no logic whatsoever that calls for the state government to be operating the biggest insurance company in Florida.
The results of this special session absolutely are no cause to celebrate. Somehow, some way, Florida lawmakers must come out of their fog.
Is there not a statesman among them?
COMMON-SENSE INSURANCE LESSONS FOR LAWMAKERS
For anyone who wants a prescription to Florida's property insurance debacle, he should start with the Insurance Information Institute, www.iii.org. This would be a good place for Florida legislators to go. But just to get them started, here are four excerpts from the institute's discussion of rates and regulation:
1. State legislators across the country are becoming more comfortable with the idea of letting competition regulate rates.
2. The size of residual risk pools is considered an indicator of the degree of rate inadequacy in the voluntary market.
3. Under an active price control system, such as prior approval, this balance may be difficult, if not impossible to maintain. For example, political pressures to provide low-cost insurance may lead to a tendency toward inadequacy, leading insurers to withdraw from the marketplace which in turn leads to affordability and availability problems.
4. The Illinois system of open competition appears to be working well.
LEAST-REGULATED INSURANCE STATES
• Illinois • Idaho
• Missouri • Wisconsin