National Insurance Swindle From Flordia
You knew they were going to try this. Florida’s property owners don’t like the price they have to pay for homeowner’s huricane insurance. The market tells them the truth, but they don’t like it. You can smell the bad idea from here. With political clout they got the State of Florida to be the primary insurer for such disasters at a below market price. For a bunch of Republicans they certainly reached for a socialist solution quick enough when it suited them.
This is a terrible idea in many ways. Primarily, it shifts the financial risk of homeowners in hurricane prone areas to those who live in less risky areas. The inlanders are paying for those who live on the coast. Secondarily, it ignores the facts of the real world. In insurance lingo that means that policy rates need to be used to build up a fund that will be used to pay off policy holders when disaster strikes. Because of politics, Florida isn’t charging enough to get close to this level of fiscal responsibility.
Now comes the big swindle. Everyone in Florida knows that if the big one hits the state will go bankrupt paying out on the coverage they’ve sold. Who can bale them out? Everyone else in the country.
Congressman Ron Klein(D. Fla.) has put forth a bill to do just that. He proposes that the US Treasury issue below-market loans to state insurance programs as a form of disaster reinsurance. That will shift the risk of owning beachfront property in South Beach, Flordia to me in New Berlin, Wisconsin. That’s b**l s**t and bad policy. That bill and any like it should be defeated in congress.
I have no gripe with anyone who wants to build in “Hurricane Alley”, but they need to be responsible for the true cost of their own decisions.
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Insurance » National Insurance Swindle From Flordia
Oct 13, 2007 at 2:28 pm
[…] jim wrote an interesting post today on National Insurance Swindle From FlordiaHere’s a quick excerptFlorida’s property owners don’t like the price they have to pay for homeowner’s huricane insurance. The market tells them the truth, but they don’t like it. You can smell the bad idea from here. With political clout they got the State … […]
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