Playing before, and up to, an insurance industry crowd, former Florida governor Jeb Bush lobbed criticism at a solution to a problem he helped create. The problem is high insurance premiums and Florida’s vulnerability to financial calamity if confronted with a Katrina type of event. It seems ironic that he can make money giving speeches about a mess he let come about. It seems even more ironic that the group he gave the speech to, the National Association of Mutual Insurance Companies (State Farm is a mutual insurance company), would give its "State Legislator of the Year" award to one of the most prolific anti-consumer legislators in Florida, Don Brown.Let’s set the record straight, the hurricanes of 2004 and 2005 occurred while Jeb Bush was the Governor of Florida. He and the leadership of Florida allowed insurance companies to cancel and non-renew insurance policies at an escalating rate prior to Hurricane Charley.
As a result, Citizens Property Insurance Corporation became more than an insurer of last resort and grew into a major insurer before the first 2004 storm hit. Before Hurricane Charley, there were no government initiatives to "harden" structures to wind damage, and Jeb Bush was the darling of developers building along the coastal areas in harms way of wind and water. During this time, Don Brown was an insurance agent by trade and a Florida House Representative with a strong propensity to support whatever the insurance industry lobby wanted as legislation. The large increases in insurance premiums and the historic growth of Citizens, now the largest property carrier in Florida, occurred while these men were leaders of the State.
The populace was outraged because insurers drastically increased rates and many could find no insurance. Jeb Bush left newly elected Governor, Charlie Crist, and Chief Financial Officer, Alex Sink, with a huge insurance mess. Whatever legislation Don Brown had supported with the backing of the insurance industry was not working by the time the legislature started meeting in 2007. So now Jeb Bush is criticizing the solution devised in January 2007. This is an easy sell to the insurance industry that wants to raise rates high enough so that there is no real gamble and one way or another they will make money.
Don Brown and only one other member voted against Floridians taking on this risk in return for lower rates. The truth is that the citizenry of Florida has largely taken on the risk of hurricane loss that private insurers are not willing to. Whether this is good or not is open to debate. Despite the fact that I believe Jeb’s Monday morning quarterbacking to be bad form and incorrect in some respects, he did manage to make a few good points during his speech at the NAMIC annual members convention:
- enforcement of building codes which harden structures to withstand hurricanes is necessary
- transparent premiums need to be tied to underwriting criteria so that better built homes receive better ratings for premiums
- premium discounts need to be more widely available for risk management improvements to property
Jeb probably should have initiated these policies while he was governor but failed to do so, I wonder why?