DC Watch - Public Insurance Option?
By Carolyn Cormey
If you own a primary or second home in Florida, how's your homeowner insurance premium working out for you? Has it been getting cheaper? Are more insurance companies entering the Florida market to compete for your homeowner insurance business, bringing down the premium cost? I think that the answer would be a resounding "NO!"
In fact, homeowner insurance carriers are still fleeing Florida, closing that door. There was a time not too many years ago when there were a lot more insurance companies offering homeowner insurance policies because back then, the insurance companies who wanted a bite out of our auto insurance apple also agreed to take homeowner insurance policies in Florida. When the hurricanes hit with horrendous damage to homes and the insurance companies had to pay out billions to settle homeowner damage claims, many insurance companies wanted (or needed) to raise their premiums to recover some of their losses and prepare for the next hurricanes but they were not allowed to do this. These insurance companies and others that no longer wanted this level of risk, threatened to close down their Florida insurance business. As a result and in an effort to try and stem the tide of insurance companies leaving Florida, insurance companies were no longer forced to keep insuring homes in order to keep selling the more lucrative, lower risk auto insurance.
This attempted "fix" seems to not have worked out very well for us homeowners because more and more insurance companies were happy to both be able to be free of the obligation to provide homeowner's insurance while keeping their lucrative auto insurance business here in Florida. Not that many years ago in Florida, we made some short-sighted insurance choices when there were many more insurance companies wanting and willing to compete with each other for our homeowner insurance business. Instead of allowing costs, risks and competition to control the homeowner's insurance premiums, Florida officials instead capped premiums and the result was to drive insurance companies who could no longer afford to offer homeowner's insurance out of the market.
"Citizens," Florida's Homeowner's Insurance Public Option: For those of us with homes or who own condominiums in projects that cannot be insured at premiums considered fair, Florida has established a "Public Option." The name of our public option insurance company is "Citizens," the insurance company of last resort! As more insurance companies stopped issuing homeowner policies in Florida, our Public Insurance Option "Citizens" gets to insure more homes and condominium projects with premiums controlled by our Florida Legislature, premiums that may or may not have anything to do with the reality of covering the risk exposure that Citizens now faces.
You and I and every single tax payer and/or insurance buyer in Florida - are the "Citizens Insurance Company Public Option!" No matter what insurance company you use, on every single insurance policy (including auto) we all pay a fee that goes to subsidize the premiums paid to "Citizens" by those they insure. As Citizens continues to insure more Florida homes and condominium projects each year, there is great concern that Citizens may not have the reserves to pay out the claims on even one hurricane if it causes massive property damage. But no matter if one or ten hurricanes hit Florida in a season and Citizens does not have the reserves or resources to pay out the damage claims of those they insure, you and I are not only the Citizens Insurance Company (the insurer of last resort), we are also the re-insurer of last resort for Citizens! Each one of us in Florida, along with our tax dollars and Florida's capacity to beg or borrow from the federal government - are on the hook to pay the homeowner insurance claims that Citizens cannot pay.
State and federal regulations with caps and controls that are so unrealistic that they drive private insurance companies out of the homeowner's insurance business here in Florida and out of the medical health insurance business in the United States always lead us to the higher premiums our bureaucrats try to avoid and they take credit for coming in with "Public Insurance Options" to save us and take none of the blame for regulating choices they made that destroy our private insurance markets.
Is Health Care Reform already progressing towards the "Public Option?" On Planet DC, we are beginning to hear the rattle of our legislators talking about regulating (capping) the health care premiums that private insurance companies can charge us, in and out of the federal government-controlled, state insurance exchanges. Our new healthcare reform law will require insurance companies to accept the financial responsibility to pay the medical claims for those who are already seriously ill even before the first day they apply for health insurance, even if that person has never paid a single premium to any company before they became ill. Our legislators seem to be more interested in setting our premiums low enough to get themselves re-elected and have little problem in ignoring the actual costs to private insurance companies. Those we elected seem unworried and perhaps even hopeful that capping health care premiums will drive private medical insurance companies out of business. Many of the legislators who voted for this healthcare reform bill are planning for this to happen, leading first to the Public Option and then to the Single Payer System, their ultimate goal. Unlike all the government-run programs that can deficit-run year after year, privately run businesses like insurance companies must cover their costs and capping their premiums is the surest and quickest way to put them out of business.
The premiums for the new Health Insurance "Public Option" will be based on underestimating the projected costs for the new "Public Option" program (something our Legislators do quite often and well) and, under the righteous mantra of "providing fair and affordable premiums to compete with the private insurance market," the remaining private health insurance companies will be driven out of business. Then we citizens, (you and I, along with the tax dollars of generations to come) will become the re-insurer of last resort to pay for the health care of every single person in this country through un-ending deficits. Isn't this the way all government-run entitlement programs turn out? "Been there, done that."
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