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FEDS RIGHTLY REJECT FLORIDA INSURANCE FIASCO
Washington, D.C., April 9, 2009— The U.S. Treasury Department has rejected Sen. Bill Nelson’s (D-Fla.) request for federal loans to the Florida Hurricane Catastrophe Fund, according to a report in the Tampa Tribune. The decision drew praise from the Competitive Enterprise Institute.
“Taxpayers in other states should not have to pay for Florida’s irresponsible, shortsighted behavior,” said Christian Cámara, CEI Florida Insurance Project Director.
"Reliance on a bailout from the federal government in one form or another as official state policy is absolutely reckless and irresponsible,” said Cámara.
"Florida politicians put the state in this predicament, so they should be the ones to address the problem they created--not the feds,” Cámara explained. “The legislature can begin by lifting ‘Cat’ Fund coverage requirements, significantly reducing the fund's exposure, and incentivizing insurers to seek reinsurance coverage in the private market."
The initial rejection does not end the state’s quest for federal loans. State officials, including insurance commissioner Kevin McCarty, have pursued a variety of options, including loans from the Federal Reserve and special authorities from Congress. But any of those options would be wrong, said CEI Senior Fellow, Eli Lehrer.
“Anything Florida gets from the federal government to bail out its ‘Cat’ Fund has the same consequences: a big subsidy from the federal taxpayers to wealthy Floridians,” Lehrer explained.