The Wall Street Journal-20080124-The Panhandle Pander
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The Panhandle Pander
Will America's taxpayers underwrite hurricane insurance for Florida homeowners? The idea went nowhere in the Senate last year, but Florida's January 29 primary has inspired Republican Presidential candidates to become suddenly and deeply concerned about the issue. Hold on to your wallets.
Readers will recall that early last year Florida Governor Charlie Crist pushed a bill through his legislature to socialize the state's disaster insurance market. Refusing to admit that an increased risk of hurricanes will naturally result in higher insurance premiums, the allegedly Republican Governor signed a bill that shoved aside much of the private insurance market while putting Florida taxpayers on the hook for catastrophic storm damage. This approach is very inexpensive -- until the next big storm hits. The state government would then have to pry untold billions from taxpayers at the moment they are sifting through the rubble of their homes.
Anticipating the inevitable, Mr. Crist went to the U.S. Congress to see if federal taxpayers could also be put on the hook for Florida's next disaster. The vehicle was a House bill to distribute below-market loans to state insurance programs and also create a federally- chartered disaster reinsurance firm to backstop undercapitalized states. After passing the House in November, the Homeowners' Defense Act found few takers in the Senate. Senate Banking Chairman Chris Dodd (D., Conn.) and ranking Republican Richard Shelby agree that a commission should study the issue. Sorry, Charlie.
So primary week represents Mr. Crist's best chance to revive his scheme. Former New York Mayor Rudy Giuliani, desperately needing a win in the Sunshine State, has happily obliged by making support for the Florida bailout a centerpiece of his recent speeches. His new Web video proudly announces that among the GOP candidates, "only one has a plan to lower rates and fix the insurance mess. Tested in crisis. Ready to lead. Rudy Giuliani."
So the hero of 9/11 will apply that experience to making sure South Beach homeowners can buy insurance at below-market rates. America's Mayor is now vying to become America's Insurance Commissioner. Unfortunately for Mr. Giuliani, he is finding that Mr. Crist is not a cheap date. There is still no endorsement from the Governor, who may be hoping to extract bailout promises from every GOP candidate.
Mike Huckabee, arriving Monday undecided about the Crist plan, failed to make it out of the Orlando airport before succumbing to the atmospheric pressure. The St. Petersburg Times quotes the former Arkansas Governor speaking in the parking lot: "If there could be a national approach where there could be sort of a shared burden [or] responsibility, I think this makes a lot of sense."
As for Mitt Romney, as usual it's hard to know where he's headed. A spokesman says the former Massachusetts Governor "has not opposed or supported any specific proposal on the issue."
The Palm Beach Post quotes Mr. Romney: "I'm willing to sit down with the Governor and with leaders of the insurance industry and others and talk about the options . . . If the private industry is able to deal with it effectively, fine. If it's not, then we need to look for some kind of either multistate sharing program . . . or perhaps a national program. But recognizing, of course, that you're not going to have very low risk homeowners or low risk states subsidizing high risk homeowners or high risk states." That last sentence sounds promising, but then so did his original Massachusetts health reform.
The most refreshing message has come from John McCain, who pointed out that we already have FEMA (and, we'd add, at least 26 other federal programs intended to assist people after natural disasters). Mr. McCain is opposing the House bill and has instead proposed reforms to make private insurance less costly. These include creating an optional federal charter to enable insurance companies to easily operate across state lines.
The Senator wobbled a bit on Tuesday with comments about preventing insurance companies from "cherry-picking" low-risk areas. But on Wednesday he reverted to good form and said a federal disaster fund would simply cost American taxpayers too much. Kudos to Mr. McCain for refusing to dance the Panhandle Pander.
