Florida’s State-Run Insurance Edges Closer to Sanity


Christian Cámara, 305-608-4300

Michelle Minton, 202-331-2251

Washington, D.C.,
March 13, 2009—After three years of limiting rate increases and the virtual
decimation of the Florida
insurance market, Gov. Charlie Crist admitted Monday that rate hikes might be
necessary to keep the state-created
Citizens Property Insurance Corporation solvent. 

Many within the insurance industry and academia have attacked
the government-run insurer, pointing out that it forces responsible residents to pay for the risks of those living near the coast
– where risks are higher and claims are more frequent. Citizens Insurance’s ability
to charge below-market rates has driven most large private carriers out of the
state. With more residents than ever in the state-run insurance pool, the question
of whether or not Citizens will be able to cover its liabilities is the subject
of heated debate. 

“Citizens has the ability to
levy assessments against all insurance policies in Florida
if it finds itself unable to pay its
claims after a storm,” said Christian
, director of the
Competitive Enterprise Institute’s Insurance Project in Florida. “These assessments could
potentially double residents’ insurance rates on all policies, including auto and home and further cripple the state’s economy
should Citizens find itself insolvent after a major hurricane.” 

Although Citizens was first set up as the insurer of last
resort, its ability to charge lower
rates than private insurers has resulted in it ballooning into the state’s largest single holder of property

“The insurance market is becoming more and more concentrated
on this one entity,” said Michelle
, policy analyst at the Competitive Enterprise Institute. “Unlike
private insurers, the state-run Citizens does not have the ability to spread risk throughout the country. Recognizing
the importance of risk-adequate rates is a necessary first step in renewing the
private market in Florida.” 

Crist’s policies on insurance have made him a scourge to industry
members, but even former critics of the Governor hail the potential rate hikes
as a move toward sanity.  While Cámara believes that politicians should
stay out of rate-setting and let insurance companies charge actuarily sound
rates, he sees Crist’s proposal as a way to
retract some of the mistakes of the past. “This will allow companies to better compete in the state and will place
Citizens in a far better financial position to
meet its obligations,” Cámara said. 

Insurance Experts Available for

Christian Cámara

Director, CEI Florida Office


[email protected]

Michelle Minton

Policy Analyst


[email protected]

CEI is a non-profit, non-partisan
public policy group dedicated to the principles of free enterprise and limited
government.  For more information about
CEI, please visit our website at www.cei.org.