INSURANCE -- High-cost exodus

Article Courtesy of The Miami Herald

Published  August 30, 2006

A slow-moving storm is striking Florida as families open their insurance bills. My family's coverage went up by an astounding 272 percent.

What should I give up to pay this bill? Should I stop saving for my kid's education? Stretch out the interval between haircuts and dental checkups and new glasses? Will there be no more family dinners at Pollo Tropical or Shorty's BBQ, no more charitable contributions, no more family vacations?

While these belt-tightening moves may be good for me, they are a disaster for our state. By taking all this disposable income out of our economy, business will suffer. When I, and thousands of other middle-class residents just like me, reduce our spending, the ripple will spread.

Restaurants, auto dealers, hotels and theme parks will feel the pinch. Attendance at sporting events, museums and movies will drop. Jobs will be cut. Sales-tax income will drop, public-sector layoffs will follow. With interest rates up, fuel prices soaring and insurance rates over the top, I sense a disaster looming in Florida.

This used to be an affordable place to live. No more. Florida's middle class is being washed away by the rising flood of insurance inflation. Monroe County is having trouble recruiting waiters, police and teachers. Broward County school enrollment has dropped. This is an indicator of things to come as residents pack up and move out of Florida for more affordable situations.

We need to rein in insurance inflation with policies such as these:

 No more cherry-picking: Insurance works when the risk is spread. If the past few years have taught us anything, it's that no part of the state is immune from hurricane damage. Insurers licensed to operate in Florida must not be allowed to cherry-pick.

 No more publicly traded insurance companies: The basic idea of insurance is to build up an ever-increasing cash reserve to pay off claims when disaster strikes. The main idea of a publicly traded company is to deliver profits to shareholders every 90 days. The two ideas are incompatible.

 Consider making homeowners insurance a public utility: Like water, power and telecommunications. Perhaps now is the time to consider regulating the insurance market entirely for the public good, not private profit.

 Consider self-insurance: like medical savings accounts and 401(K) accounts. Perhaps we need to develop a homeowners self-insurance account. Imagine a plan whereby homeowners could save up enough to cover a large deductible, just like catastrophic medical coverage allows.

 Consider a range of deductibles: Homeowner's and windstorm coverage is presented as a take-it-or-leave-it proposition. Shouldn't I be able to at least choose from a range of deductibles like I do with auto and healthcare insurance?

 Look through the smoke screen of reinsurance: The insurance companies claim that the high cost of reinsurance is driving up rates. Baloney! Reinsurance simply allows big insurance companies to grow bigger. They are blowing smoke, and someone needs to call them on it. After all, if Florida demands a certain level of reserves, why do they even need reinsurance at all?

Our elected officials promised to take on Florida's toughest issues. Well, this is it, Florida's toughest issue. If Tallahassee can demand results from our third-grade children, we Floridians can demand results from Tallahassee. Now. We're tired -- and quickly going broke while we wait.