Use state's found money to renew state's insurer

The Legislature is deciding what to do with an unexpected $2.2 billion for next year's budget. Give some of it to the people.

It wouldn't be a direct payment. Legislators would use the money to make up part or all of the deficit facing Citizens Property Insurance Corp., the state-run insurer of last resort. Last week, Ernst & Young calculated that Citizens is short $515.9 million after paying $2.4 billion in claims from last summer's storms. If the Legislature gives no money, every Floridian who has homeowners insurance -- not just the 820,000 Citizens policyholders -- will face a 6.8 percent assessment per $1,000 of coverage to cover the deficit. By helping Citizens, the Legislature could reduce or eliminate the assessment.

Giving the money would make sense for several reasons. Since much of the revenue windfall will come from sales taxes for hurricane repairs, the money would go back, in essence, to some of those who helped to generate it. Also, the windfall is a one-year event, so it would be proper to use it for what we hope will be just this one-time expense. Finally, government must act because the private market failed. Citizens grew out of reforms that the Legislature approved after Hurricane Andrew. It offers insurance, especially for wind damage, in areas such as eastern Palm Beach and St. Lucie counties that private companies won't touch. Supposedly, if private carriers didn't have to take all of the riskiest policies, more private carriers would write business and competition would increase. Because of rules the Legislature imposed, however, Citizens must offer rates higher than any private insurer's, even where there is no private market. And competition hasn't materialized.

One of many insurance bills before the Legislature would give Citizens more flexibility on rates. The Florida Insurance Council does not have a position on the deficit, but Director Sam Miller says Citizens' rates are too low, noting that there wasn't enough money to pay claims. "The Legislature," he said, "may be forcing itself to appropriate general revenue whenever there is a significant hurricane season and, at some point, more than $515.9 million."

If Citizens had worked as planned, however, the deficit wouldn't be so large. Covering that deficit and making Citizens work better would show consumers that the Legislature has their interests at heart. Another sign would be to pass Senate Bill 1158, sponsored by Ron Klein, D-Delray Beach. Among other things, it would create an office of public counsel for insurance, modeled after the one that represents consumers on utility issues. On Tuesday, it passed the Banking and Insurance Committee unanimously. Another insurance bill, SB 1488, faces a committee vote today.

Whatever the weaknesses of Citizens, the state created it, and policyholders had no choice. With $2.2 billion in found money, the state can make Citizens whole for next year, then fix it and the wider insurance problem in a way that doesn't leave consumers exposed.