Insurance Law

Time Magazine takes a look at Florida ...

Greetings from Florida, where the winters are great!

Otherwise, there's trouble in paradise. We're facing our worst real estate meltdown since the Depression. We've got a water crisis, insurance crisis, environmental crisis and budget crisis to go with our housing crisis. We're first in the nation in mortgage fraud, second in foreclosures, last in high school graduation rates. Our consumer confidence just hit an all-time low, and our icons are in trouble--the citrus industry, battered by freezes and diseases; the Florida panther, displaced by highways and driveways; the space shuttle, approaching its final countdown. New research suggests that the Everglades is collapsing, that our barrier beaches could be under water within decades, that a major hurricane could cost us $150 billion.

I was in London two weeks ago and saw a play called Avenue Q.  The opening song is entitled "It Sucks to be Me" (YouTube version potentially NSFW).  One could easily change this song to it "Sucks to be Florida" and if you watch the video, even Gary Coleman would agree.

What is interesting about the above litany of sucks is that most are the result of choices the State of Florida made.  Water was purposefully under priced to promote development; insurance is under priced and the industry is being driven from the state; pro growth policies are encouraging water use and increasing property risk and inappropriate land use (in the sense that not all costs are being considered in land use decisions); the tax system is designed that non-Floridians pay for general governmental services; and elderly wealthy retirees who were courted by low taxes directed at them do not have interest in paying for schools; and  finally constitutional homestead exemptions make school tax revenues too insufficient for  current needs.  These are all policies made by the people of Florida.  The big problem, as a non-Floridian, is that the rest of the country may be asked to bail the state out from its predicament.  That potential bail-out would be a mistake of epic proportions as then the state will never have an incentive to get its fiscal house in order.

Update:  Lynn Kiesling links to this Forbes article on the under pricing of water by David Zetland.  Under pricing is not just a problem in Florida's insurance market, but in many markets nationwide.