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Observations and musings on Jacksonville Politics

Wall Street Journal Slams Charlie Crist, Says FL Headed For Disaster

Tagging him “Hurricane Charlie,” the conservative Wall Street Journal slammed Florida Governor Charlie Crist this week. ┬áThe newspaper cites Crist’s recent veto of property insurance reform as one of the major reasons Crist wants to get out of Tallahassee “before the next hurricane hits.” ┬áHis veto, says the Journal, “all but guarantees a state disaster.”

The bill would have trimmed the cost of a state-run enterprise that insures homeowners against storm damage. The program has an $18 billion unfunded liability and has taxpayers on the line for tens of billions in property losses from the next major hurricane. The Republican legislature tried to reduce those future losses, but Mr. Crist sounded like Barney Frank rolling the dice on Fannie Mae in declaring there’s nothing to worry about.

By way of background, two years ago Mr. Crist gave a big gift to coastal property owners by converting the state of Florida into one of the world’s largest property insurers. The Citizens Property Insurance Corporation provides below market-rate insurance policies directly to homeowners. Meanwhile, the Florida Hurricane Catastrophe Fund (CAT) regulates how much private insurers can charge homeowners and requires companies to purchase low-cost reinsurance from the government. Mr. Crist didn’t invent these programs, but he vastly expanded their reach — to about one million policies today. He transformed Citizens from insurer of last to first resort.

Here’s the problem: This system isn’t even within a coastal mile of being actuarially sound. The state government acknowledges that in many high-storm risk areas the premiums are from 35% to 65% below what is needed to cover potential claims. That subsidy has made Mr. Crist popular with many coastal residents even as the state plays Russian roulette with the weather.

You can read the rest of the article here.

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Filed under: Florida, Florida Politics, , , , ,

Wall Street Journal Slams Crist

Gov. Charlie Crist may be riding high with a 73% approval rating, but the conservative Wall Street Journal is less than impressed. The Journal refers to Crist as Florida’s “Unnatural Disaster”—specifically, his voter-pleasing but financially unstable insurance plan which basically puts taxpayers, not insurance companies, on the hook for any future natural disasters.

The Journal points out the obvious—how can an insurance company with $3.4 billion in net assets possibly handle more than $400 billion in total exposure? It’s a question we should all be asking.

Read the entire article here.

Filed under: Florida, Florida Politics, , , , ,

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