Let Floridians save 30% while the state earns billions!
Rick Scott’s proposal to privatize Citizens Property Insurance Corp. is simply a bad idea. It would guarantee increased rates. There is a much better way to fix Citizens. Citizens is a mess with potentially huge exposure. That can be remedied, with 30% savings for all Floridians while the state treasury can earn billions per year. You don’t need to be an economist to understand this. It is just common sense.
Citizens is in trouble because it guarantees private insurers’ profits, and foists all of the risk onto Florida taxpayers. This is an obvious recipe for disaster. Citizens covers the riskiest 22% of Florida homes, nicely protecting the private insurers at our expense. Private insurers exploit Floridians worse each year. State Farm raised rates 14.7% and dumped another 125,000 policyholders this year. Was there a hurricane I missed?
Citizens should offer all homeowners in Florida coverage identical to what they have now from private insurers, at a 30% discount. Just bring your policy to an agent and save 30% by switching to Citizens.
Adding the “safest” 78% of Florida homes to risk pool would dilute Citizens’ risk to the lowest in the nation. Then Citizens could reduce rates by 30% to its existing customers, too. Even the worst hurricanes affect only a small percentage of Florida’s 8 million homes.
Six million new customers, saving only $500 per year, is $3 billion per year. That would generate at least $25 billion per year of economic activity in Florida, creating 30,000 jobs. The state could earn $5 billion per year in profit. Citizens would no longer be just the largest property insurer in Florida, but the safest and most profitable in America.
$25 billion in economic activity this year will make $50 billion next year, and another 30,000 jobs. And so on.
No need to argue about “socialism.” The state is already in the insurance business, with no realistic way out. The question is, shall we make some money at it and save Floridians billions per year? Or encourage more private insurers to suck even more blood out of our families and our state’s economy?
When everyone works for the state, we call it socialism. What do we call it when the state works for everyone? Common sense.
Farid A. Khavari, Ph.D.
Economist and Candidate for Florida Governor (Independent, 2010)