trust fund proposal
Letter To Editor Courtesy of The Sun Sentinel
Representative Dan Gelber, Rep. incoming minority
leader of the House of Representatives
Published August 21, 2006
week, thousands of homeowners get the news that they are either being
dropped by their insurance companies, or their premiums are skyrocketing.
Unaffordable hurricane insurance premiums are forcing as much dislocation
and pain as the hurricanes themselves. For many, the real threat of this
expense may be the loss of a home or lowering their standard of living. Most
acutely affected are everyday Floridians on fixed incomes.
The recent harsh winds are only part of the problem. Much, in fact most, of
the blame falls on Republican politicians who created a dysfunctional
windstorm market that favors insurance companies over homeowners. The system
has as its central piece the state-run insurance pool known as Citizens
Property Insurance Corp., which gives insurance companies a place to send
their worst policies. By law, Citizens must charge its customers a rate
higher than the rates available in the private market.
Private insurance companies absolutely love the Republican windstorm system.
They can abandon policies by the thousands without worrying that their
customers will be picked up by a competitor.
There is a better way. We need to eliminate Citizens, and instead, have the
state provide a minimum level of windstorm coverage to every Floridian
needing insurance through a premium-financed hurricane trust fund. These
policies will protect up to a certain value of potential loss, and
individualized premiums will be based upon the property's risk. Rather than
just be comprised of high risk accounts, this state layer of insurance will
include both good and bad risks and, unlike private insurers, won't have to
pay taxes or make a profit.
In the immediate past legislative session, the Republicans would not even
give this proposal a hearing. That is because the Republican-controlled
Legislature has developed a symbiotic relationship with the insurance
industry. Every Republican effort to address the issue brings the same
boilerplate proposals: (1) allow insurance companies to charge more and make
more profits or (2) walk away from homeowners leaving them stranded with,
you guessed it, Citizens.
That is exactly what the Republicans did in the last legislative session
earlier this year when they actually reduced insurance regulation over the
The good news is that the Republicans are now scared. The bad news is that
they think they can skate past this election season by merely acting
concerned. They may be right. The governor just convened a "special
commission" whose primary purpose is to give voters the impression they
are really worried about the maddening insurance premiums.
Of course, none can explain why the Republican-controlled Legislature and
the entire Republican Cabinet did nothing during the last six legislative
sessions except satisfy the demands of the insurance companies. Look for
them now to come up with some plan to send you a little cash, which they
will call "rebates," that will be nowhere near the amount of your
Perhaps, by chastising my colleagues on the other side of the aisle, I am
taking too strong a partisan position, but as the party in power, they need
to be held accountable for their failure. This crisis demands that the
governor call a special session of the state Legislature and lock the doors
until real answers are provided.