Florida insures itself for hurricane season
This photo from the NOAA National Hurricane Center shows the center of Hurricane Isabel located about 780 miles southeast of Cape Hatteras, N.C. on September 15, 2003.
SCOTT JAGOW: Today's the start of the hurricane season — and this year could be a doozy. Forecasters expect about 15 named storms, and a handful of them could be major hurricanes. How are insurance companies reacting? In Florida, they're running for the hills. Florida's largest insurer is now a state-run company. Dan Grech reports.
DAN GRECH: Florida created Citizens Insurance in 2002 to be the insurer of last resort. But then came eight hurricanes in two years, and private insurers started canceling policies along the coast.
Citizens now covers nearly half of Florida properties.
NANCY WATKINS: How much business do you want to shift into Citizens? How far do you want to go?
Actuary Nancy Watkins is a principal at Milliman, an insurance consulting firm.
WATKINS: I mean at the extreme, you could have the whole state insuring itself. Is that really a good thing?
Many observers don't think so.
William Stander is with the Property Casualty Insurers Association of America:
WILLIAM STANDER: I think history has proven that private markets are the most efficient way of moving money around, and not through government mechanisms.
But Citizens is likely to keep growing. Florida has frozen Citizens premiums until January 2009, giving the state firm the cheapest rates in town.
I'm Dan Grech for Marketplace.