Florida Gov. Charlie Crist's veto of a hurricane insurance reform bill could lead to economic disaster if a major storm strikes the state.
Crist is running for the U.S. Senate in 2010, and the Wall Street Journal speculates that "one reason is that he doesn't want to be in Tallahassee when the next hurricane hits."
Crist greatly expanded the reach of the state's Citizens Property Insurance Corporation, which provides market-rate insurance directly to homeowners. The program has an $18 billion unfunded liability and taxpayers could be hit with a huge bill if the program must pay out billions in claims following a major hurricane.
Meanwhile the Florida Hurricane Catastrophe Fund regulates how much private insurers can charge homeowners, and in high-risk areas insurance premiums are as much as 65 percent below what is needed to cover potential claims, The Journal reports.
As a result, large insurers have curtailed operations in the state or withdrawn from Florida completely because they can't make money with the regulated rates.
The bill that Crist vetoed would have allowed private insurers to compete with Citizens and set their own premiums.
Crist claimed the reform would be a giveaway to the large insurance companies.
But The Journal noted that while the Republican legislature sought to reduce potential future losses, Crist "sounded like Barney Frank rolling the dice on Fannie Mae in declaring there's nothing to worry about."
And William Proctor, sponsor of the bill in the state House, declared: "We are one major hurricane away from an economic disaster in this state."
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