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Name:
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Tallyman
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Subject:
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Lifetime Laker has got it
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Date:
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2/16/2007 9:27:39 AM
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Here are some wise thoughts.
Can our environment afford 'affordable' insurance?
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By Rep. Don Brown
Every elected official who has tried to fix Florida's insurance problems has met with more frustration than success. One of my biggest frustrations is the silence of Florida's environmentalists.
The environmentalist community can always be counted on to support limits on coastal growth and oppose unwise or uncontrolled development. Today, we're learning that government actions that distort market forces - in particular, actions that subsidize insurance costs - create powerful incentives for unwise or uncontrolled growth. It's time to consider whether true market-pricing of insurance, where consumers pay the real, unsubsidized cost of living along our vulnerable coast, may be the best way of protecting that coast.
Try a little thought experiment. Let's say owners of Hummers and other big SUVs complain to the government that the high price of gasoline is making their vehicles unaffordable, and the businesses that depend on SUV sales complain that unaffordable SUVs would have devastating ripple effects throughout the economy. So the government decides to provide "affordable" gasoline to SUV owners, and it decides to tax owners of Priuses and other hybrid vehicles to support the SUV subsidy.
Is there any doubt about what would happen if Priuses were taxed to make Hummers more affordable? Inevitably, Hummer sales would go up and Prius sales would go down.
Thankfully, the government did not do anything that stupid a few months ago when gasoline topped $3 a gallon. And (as any free-market conservative would have predicted), Hummer sales went down and Prius sales went up.
Our state and federal governments have responded very differently when it comes to demands for "affordable" homeowners' insurance. The federal government created the heavily subsidized National Flood Insurance Program, and the state created the heavily subsidized Citizens Property Insurance Corp., which is relying on more than $2 billion in subsidies - taxpayer dollars and assessments on property owners - to cover the deficits it accrued during the 2004 and 2005 hurricane seasons. As costly as insurance from Citizens is, Citizens' premiums are far more "affordable" than they would be in the absence of that $2 billion subsidy.
To make matters worse, a substantial part of that subsidy goes to owners of vacation homes and investment properties. This year, Congress defeated proposals to force owners of vacation homes to pay the full actuarial cost of their flood insurance, and the Florida Legislature defeated proposals to require Citizens to charge an unsubsidized rate for vacation homes.
Everyone wants insurance to be affordable, but everyone has a different definition of affordability. Subsidies may make sense when they kick in only after a very serious hurricane, and subsidies may make sense temporarily if that's what it takes to keep people from losing their homes.
But we need to figure out what kind of "affordability" Florida can afford. For the people who care the most about our fragile environment, the immediate question is whether Florida can afford a coastal development policy that includes subsidized insurance for vacation homes.
State Rep. Donald D. "Don" Brown, a Republican, represents District 5, which covers Holmes, Washington and parts of Jackson, Okaloosa, Walton counties. Contact him at donald.brown@
myfloridahouse.gov.
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