Restoring the Private Property-Insurance Market To Reduce Florida’s Risk of Financial Insolvency

Study for The James Madison Institute

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From the Introduction:
Without swift, sweeping reform, Florida’s current system for property and casualty insurance could well place the state in grave fiscal peril. This paper presents an agenda for reforming Florida’s property and casualty insurance system in the short term. It presents short-term steps that would pull Florida back from the brink of fiscal ruin, improve the state’s fiscal climate, reduce property insurance rates for many Floridians, and make the state safer and more secure against the threat of hurricanes.
The paper consists of two major sections and a conclusion. The first section describes the lay of the land as of early 2009 and outlines the dimensions of Florida’s current fiscal crisis. The second section outlines three important but incremental steps—all politically and practically achievable during the Legislature’s 2009 regular session—that would improve the health of Florida’s property insurance environment. The conclusion section outlines a longer-term vision that would restore free market competition toFlorida’s property insurance system. The paper reaches a simple bottom line: Florida must change its property insurance system, or the misguided reforms of early 2007 could well result in permanent, severe, and lasting damage to the state’s economy and its citizens’ way of life.