In January 2007 Governor Charlie Crist announced that Citizens was going to compete with private insurance companies. More recently however Citizens announced that it plans to give away a huge book (173,000 customers) of its business to other insurance companies; this seems a strange method of competing.
Ten years ago, the Florida Windstorm Underwriting Association and the Florida Residential Casualty and Property Joint Underwriting Association drastically reduced their size following Hurricane Andrew by providing incentives for private insurance companies to assume policies placed with them. After Citizens was formed to take over the policies of those two entities, the previously minimalist role of Citizens as insurer of last resort changed to the largest property insurer in the state.
Hopefully, this announcement is a turning point moving us in the direction of less government involvement in private industry. The expansion of Citizens was a rather bizarre socialist statement by our Governor; however, some, myself included, questioned what other options were available. I mean really what should the government’s role be if private insurance companies are determined to pull out of a market or charge extremely high rates, some bordering on unconscionable?
Perhaps our Chief Financial Officer has the secret formula to rate reduction with her proposal to reform the Cat Fund, but only time will tell. From my perspective, I suspect some private insurance companies are kicking themselves for missing out on the "turkey shoot" of high rates and no storms over the past two years. Eventually, the lure of extraordinary profit is hard to resist and those circumstances, along with additional capacity provided by similar thinking re-insurers may reduce the huge risk the taxpayers of this state have assumed by having Citizens as the largest insurer in Florida. I bet even Charlie Crist is smiling that Citizens is helping policyholders switch, rather than compete, for their premiums. Insurance is not the traditional business of government and thankfully we figured that out before we really had to pay the price.
