The Governor, Charlie Crist, who appointed me to the Citizens Mission Review Task Force has gotten married to a beautiful woman. While I am certain he was planning their honeymoon this past week, I was pouring over insurance rate data, market share analysis, and a reinsurance presentation regarding Citizens Property Insurance Corporation. I bet his work was a whole lot more fun.

Insurance actuarial studies get pretty nerdy.

The St. Petersburg Times ran a story on the progress of the Task Force. While the work of the Task Force is ongoing and no votes have yet to be taken, there is one thing we have to do with Citizens before it is too late–reduce the financial exposure to catastrophic loss. Florida simply cannot afford it. If a major hurricane struck Dade or Broward county, Florida could not efficiently raise the money to pay the claims.

Rates for Citizens will go up. I support annualized caps on any rate hike so the increases will not be shocking. Citizens is depopulating policies, and we need to encourage that as well. I do not agree with a moratorium to prevent Citizens from insuring new construction because some areas of Florida would be subjected to extortionist rates following strong hurricane seasons. In some areas, Citizens is the only insurer to write coverage.

I have learned quite a bit about Florida’s insurance marketplace. Many of my colleagues on this Task Force are very experienced and have been working on these issues for over a decade. There are no simple and easy answers without harsh ramifications for some. I have learned why some ideas were tried before with unintended consequences.

Trying to resolve the best policy for Citizens is a lot like pushing on a box to make it square–as you try to push in two ends, the other ends pop out. There can be a lot of frustration trying to get it right. People who offer knee jerk solutions are simply ignorant of the situation or grandstanding for the media.

The good news is that rates have come down in many cases. By imposing a cap on Citizens rates, people could afford coverage while the insurance market corrected itself following the 2004 and 2005 hurricanes. As well, many new insurance companies are selling insurance so that a market exists. The impact from lifting the freeze on Citizens’ rates will be felt less because there are other insurers that will compete for the business.