Insurance at a premium

With the devastation of New Orleans and the Mississippi Gulf Coast, and with hurricanes threatening Florida shores, the last thing residents need is uncertainty about the state's insurance company of last resort.

The board of the public-private Citizens Property Insurance Corp. on Friday delayed a massive rate increase because board members knew too little about the complicated projections. A week earlier, Citizens' No. 2 official, Chief Operating Officer R. Paul Hulsebusch, resigned after a lawsuit accused him of accepting a $28,000 motorcycle as a bribe. A St. Petersburg Times report Sunday said Mr. Hulsebusch and two Citizens financial officers had been under scrutiny just a month ago for opening a private insurance business together. The two underlings were forced to resign. They started the private business -- without Mr. Hulsebusch -- but remained on the Citizens payroll as consultants. Florida Chief Financial Officer Tom Gallagher has launched a criminal investigation.

Those troubling events have to make Citizens' customers uncomfortable with paying even more for what is statutorily designed to be the highest-cost insurance provider in the state. Under a new method of calculating premiums, Citizens had proposed an average 37 percent statewide rate increase -- 32.5 percent in coastal portions of Palm Beach County and 14.5 percent in the rest of the county. The increases would affect about 300,000 Citizens policyholders, but not the company's wind-only customers. Board members said they couldn't vote on it Friday, pushing it back to November, because it was the first they knew of it. More likely, they knew better than to sock customers with a huge rate increase amid the revelations about Mr. Hulsebusch.

Citizens tacked a 6.8 percent increase on every Floridians' homeowners insurance policy -- whether it was sold by Citizens or not -- to make up a $516 million deficit left from last year's hurricanes. As hurricanes continue to stir anxiety, Citizens is failing its primary function of delivering peace of mind. State legislators can't wait for this latest scandal to blow over. Citizens had trouble delivering claims last year, is having trouble paying its bills this year and its top officers seem to care more about themselves than the public. For legislators, the task of insurance reform cannot wait.