Socialism for insurance companies

My column this morning raises the question again of whether Florida would be better off with state-run hurricane insurance coverage, instead of letting the private sector cherry-pick the safest parts of the state and stick the public sector with the highest risk.

I know that critics are quick to call state-run insurance "socialism." But really, we've already got socialism -- just a lousy form of it that benefits the private companies, instead of spreading the risk across the state. I went through several rewrites of this column -- the initial tone was too wonkish, I thought, and then the next version was too angry...

* * * *

Let's review the action.

(1) The insurance industry abandons Florida homeowners on a large scale.

(2) The public sector expands to take over the risk.

(3) Our governor and Legislature stick the public with even more risk in early 2007.

(4) But instead of the hoped-for cuts, many companies file for rate increases.

All righty, then!

This brings us to the current huffing and puffing. The state wants answers from Allstate. Allstate tells the state to get stuffed. The state breaks a pool cue over Allstate's head. And so forth.

That brings us up to date.... [Link to entire column]

Comments

[Larry]

Howard, this is no doubt a hot-button item for all Floridians. And I'll be the first to say that I do not know what the solution is. I do know that the State of Florida and all Floridians are now bearing the brunt of the risk of windstorm damage. I think your proposal to kick all their butts out from all windstorm risk and let them come back to assume the usual and customary risks has merit and deserves study. But I also think that for Florida to assume all windstorm risk could be disastrous as well. I know that folks living in Kansas shouldn't have to bear the risk of hurricanes in Florida, but don't we all, to some degree bear at least a portion of the risk other communities suffer that Floridians do not. Earthquakes for example, and Tornado Alley. The purpose of insurance is to spread the risk and in order to be efficient it needs to be spread over the widest possible pool. To isolate Florida into bearing the total risk of hurricanes does not seem fair either. I can't understand how I could have lived here the past sixty years and now all of the sudden can't afford it. I wish I knew the answer.

[Tom]

As firmly against bigger, more intrusive, and more expensive government as I am, I tend to agree with you. We've gauranteed the private insurers the profitable part of the market and left ourselves with only the higher risk insurees. Let's take them all and give ourselves a chance to break even or (dare I say it) make a profit. I'd be willing to bet that the insurance companies would be back to us with offers of better behavior. As an aside (and with a little knowledge of the way citizen works) we'd need to impose reasonable business management constraints on Citizens to maximize our position (particularly in the area of commissions paid to agents.

[Chris]

Why let them have auto insurance? I say divide the total value of claims by the 8 BILLION gallons of gas that gets pumped in Florida per year. Those 6-10 cents per gallon at the pump would insure that everyone is covered, every mile of the way. The interest on collections would cover the adjustors and overhead expenses.

[Don Mott]

Being as I am not a lawyer or legislator I'm not sure if what they are doing is completely legal or not but one thing I believe the state should look at is the separate corporations the insurance industries have set up in Florida. The state corporations report all of the losses but do they also receive all of the profits or does the parent company reap in the profits as well? If the parent company shares in the profits they should also share the losses thereby preventing them from making it look as though their losses versus profit are exaggerated. In my simple mind it looks as if they found a loophole in the regulations to take advantage of. As with health care the greed of big business is paid for by the working man and it gets more disgusting each day. It is most gratifying to see the state finally playing hardball with them instead of just rolling over like a puppy to be petted.

[HIC.PAC]

215.555 Florida Hurricane Catastrophe Fund.--

(1) FINDINGS AND PURPOSE.--The Legislature finds and declares as follows:

(a) There is a compelling state interest in maintaining a viable and orderly private sector market for property insurance in this state. To the extent that the private sector is unable to maintain a viable and orderly market for property insurance in this state, state actions to maintain such a viable and orderly market are valid and necessary exercises of the police power.

a valid and necessary exercises of the police power? It does sound like "socialism" but if it is for the benefit of (insurance) corporations the proper term is "fascism".

To quote lest you kill the messenger: " In totalitarinism, power --instead of being balanced between those who control the means of force and those who control the market mechanism -- is concentrated in one group who control both. Where the former take control of the market mechanism are communist(socialist). Where the later control the means of force are called fascist. After the take-over, however, it is difficult to tell one from the other." in What Professor Gailbraith Neglected to Tell His Television Audience -1978

okay, it may not be "fascism" nor "socialism" but it does appear to be some form of totalitarinism.

[Sheryl]

One of the people who posted a response to your column online had it exactly right. Former Gov Bush and the Legislature allowed the insurers to spin off subsidiaries that carry policies only in Florida, so of course they experience terrible losses. The idea of insurance is to spread risk over the greatest number of insurees possible; this not only increases the funds available, it also reduces the cost to each person.

Instead of trying to force set rates on these subsidiaries, if Gov Crist and the Legislature are really trying to solve the problem, they'd rescind the permission given to insurers to set up these shell companies. No other state seems to allow this. California with its earthquakes and wildfires, and Gulf of Mexico states all have the national insurers, not subsidiaries.

I don't think the Governor and Legislature are really looking for solutions, though. I think they just want someone to blame so the taxpayers will think they are doing a great job. After all, they've declared war on local government, too, so solution hunting doesn't seem to be in style in Tallahassee now.

[William C. Ballard]

People don't understand that they, not the insurance companies, ultimately pay the hurricane damage bill plus a whole bunch more. To get the facts, go to the Hurricane Insurance page on former state representative Don Crane's website, http://web.mac.com/doncrane and read the Executive Summary and Detailed Analysis. Bill Ballard, member, Crane Group

[peggy arvanitas]

Of course, right now you cannot make insurance companies divulge information about their "confidential" business practices. And since Howard Troxler has been pandering for news from the likes of Mike Twomey and Harold MCLean, even though I made most great stories possible from my Florida PSC record request, Howard enjoys some of the fault here.

You see, Harold McLean as General counsel of the Florida PSC, with Lila Jaber struck down a rulemaking review of the confidentiality clause a smart PSC commissioner Palecki tried to undo for the review of info on FP&L and Bellsouth and Verizon rates. From my emails I showed to Twomey in 2003, now AARP then dinky small company nobody.

McLean's friend, Twomey saw an angle to get on PSC dockets to make some money, and chose to smear new commissioners like Davidson that he helped prepare for Commissioner interviews for Julia Johnson. The truth was, every problem with confidentiality could have been changed for consumers, but McLean did a deal to keep his job.

The smear campaign that Twomey perpetuated and the vouching for him on the Fla Bar complaint I did against McLean allowed his selection as OPC Chief. He made motions for Twomey to be on the dockets. Every major scandal before the PSC in the last 3 years occured because General Counsel PSC McLean allowed it to occur to keep his job.

Now, did Troxler know this? Yes! I produced emails to show him what came out of PSC General Counsel McLean's mouth. The phone Bill was WRITTEN by the PSC staff and McLean and the Bellsouth lobbyists, and the emails sent to Lou Hau and Troxler showed the truth/ I have archives to show when I sent them all.

What does the confidentiality statutes mean to you? The same paople that Troxler liked to get "stories" from about the PSC NEW COMMISSIONERS were the ones that impeded a review and change on how Florida reviews and asks for information from utilities AND insurance companies. Diana Cauldwell, the senate subcommittee director also co-ordinated the writing and creation of the Phone Bill.

If you want to fix the insurance mess, you have to go to the experts that know a LAW CHANGE on confidentiality is needed before we can demand evidence for rate review from the Industry. If you pander and cover up the truth so someone can give you a quick story, Howard, dont you create the problem we are in? No review, because the 2001 Palecki PSC commissioner challenge from General Counsel Harold McLean would have opened the door to transparency. Emails from McLean and Jaber and then Jeb meetings killed his re-appointment.

Next time someone sends emails out of an attys mouth to show deals are being done, print the truth Howard. It then leads to OTHER TRANSPARENCIES. Like our insurance problems.