Bad McCarty! Bad!

Will regulators never learn? You can’t force businesses to actively pursue a business model that is unprofitable. Florida’s Governor Charlie Crist and Insurance regulator Kevin McCarty have been trying for years to force insurance companies in the state to lower their premiums to rates that, frankly, aren’t high enough to cover the damages from hurricanes. Insurers have pushed back and many have simple cashed in their chips and left the state entirely.

Now in a move, like a spoiled child’s tantrum in a toy shop, Kevin McCarty is trying to force State Farm– which is leaving the state, to do what he wants under the guise that this is for the good of Florida’s residents. He’s wrong. Completely, utterly, without question, wrong about the result of his actions.

McCarty’s latest effort to “protect” Florida consumers by twisting the arm of State Farm while it tries to exit the FL market will only hurt consumers in the long run by irreparably damaging the appeal of Florida’s insurance market in the eyes of private insurers who might have (in the distant future) considered returning to that particular market.  Now, even if by some miracle of regulatory sanity Florida manages to create a somewhat profitable market where insurers can charge actuarily adequate rates, what companies will risk entering a market they may not be able to get out of if insanity returns?

This does not protect consumers—like almost every action McCarty and Crist have taken to force insurers to behave like good little children, this latest show of force will only hurt everyone in Florida and push solvency of the state one step closer to the brink.

Photo: [Scott Keeler | St. Pete Times]