Much of Florida Gov. Rick Scott’s tenure in office has been consumed with confronting the mistakes his predecessor made in the property insurance market. Charlie Crist left office having stuffed the two state-run entities — the Florida Hurricane Catastrophe Fund and Citizens Property Insurance Corp. — until they were absolutely overflowing with catastrophe risk, and was lucky enough to get out before the big one hit.
Scott has been much more realistic (or less blatantly cynical) about the huge risks hanging over the state when (not if) a major hurricane eventually strikes. Unfortunately, he hasn’t been terribly successful in getting his reform plans through the Legislature, which is one reason he’s been pushing Citizens, in particular, to make as many positive changes as existing law will allow them to. But we’ve had no doubt that he understand the importance of risk-based rates.
Which is why this report from the Palm Beach Post suggesting that Scott was following the example of his predecessor in another way — arguing for a preemptive bailout from the federal government in the way of a national windstorm pool, along the lines of that proposed by former U.S. Rep Ron Klein — had us both surprised and concerned. The Post reports:
Many Florida homeowners live in fear of losing their windstorm insurance. Gov. Rick Scott suggested today that windstorm coverage go the way of flood insurance and become nationalized.
“It would make a lot of sense,” Scott said at a start-of-the-season news conference at the National Hurricane Center in Miami-Dade County….
…A national windstorm insurance pool would be similar to one that has been in place for flood insurance since 1968. Property owners in designated areas could buy insurance from the government.
Congress has considered windstorm pools, including one proposed in 2008. Critics have said the program could run up potentially huge bills for the federal government.
Given that Eliot Kleinberg’s article left somewhat vague what the “it” is that Scott thinks “would make a lot of sense,” I reached out to Scott’s communications director, Brian Burgess, to determine what the governor’s stance was. Is he, indeed, endorsing the dreaded Beach House Bailout?
“The governor has not endorsed any such bills, and his comments should not be construed as such,” Burgess said by email. “It’s fair to say that at this point he is open to suggestions and actively seeking solutions that would resolve the problem.”
Burgess added that Scott was “in search of a solution to this problem that would help keep the cost of living in Florida low — i.e. a solution that avoids a rate hike or minimizes the impact of correcting this problem.”
“If you know of a workable solution, we’d be interested in hearing more about it,” Burgess said.
Well, that’s a relief. Because, in fact, we DO have some workable solutions in mind. Just check out the paper Eli Lehrer and I did with the James Madison Institute: Workable Solutions for Florida’s Challenging Insurance Problems.