It’s pretty clear that Florida’s state-run property insurance system is a total mess in just about every way. As Ray Lehmann, me, and others have written the legislature–given sufficient political will–could solve these problems. But, to date, they just haven’t. This has led a lot of Right-leaning Floridians, Gov. Rick Scott among them, to suggest that they might work for a federal “backstop” that would amount to a pre-funded bailout of Florida’s insurance system. It’s obvious that such a proposal–a government takeover of a private industry that, whatever its flaws, basically works in most of the country–is not at all conservative. But, given that it’s “free money” for Florida, it’s awfully hard for politicians to turn down such a siren call of backstopping. When former Rep. Ron Klein proposed a bill that would do it during his last term in Congress, he got significant support from other Republicans including people like current Florida Ag Commissioner Adam Putnam (who once co-sponsored such a bill.) If a Florida political leader wants to stick to free-market principle and oppose a federal backstop without seeming heartless or turning down needed help, he or should could say something like this:
Dealing with major disaster should be a federal-state partnership. In certain areas–provision of emergency human services and repairing infrastructure of national significance–there’s a clear leadership role for the federal government. This is why we have a federal government in the first place and why, from 1803 on, the federal government has responded generously to communities struck by disasters. In some areas, like property mitigation, I also see a potential for a larger federal role. In any case, Florida doesn’t and won’t refuse this sort of human services and infrastructure assistance. But insurance, under the McCarran-Ferguson Act, is the largest and most important area of economic activity that falls almost entirely under the control of state governments. Except after Hurricane Katrina, the federal government has never provided assistance to rebuild individual houses. Given our deficit of nearly $1 trillion this year alone, I don’t think we should do that in the future. Florida runs its own insurance system and, for its flaws, we believe we do it than the federal government ever could. I’m convinced that we can and should fix its flaws on our own and that’s why I’ve supported plans to do just that by reducing the size of the Cat Fund and Citizens so that we don’t need a federal bailout that would surely come with enormous strings attached. A federal “backstop” or “bailout” might provide some short term relief but it would distract us from the key mission of finding principled, effective, free-market solutions to our problems that benefit everyone. Certainly we need help after disasters but we should ask the federal government to focus on the emergency preparedness things that it does best and, as Floridians, work together to fix our state’s insurance system.
We can only hope.