South Florida has been having a protracted property insurance crisis in the wake of Katrina and back to back heavy hurricane years. Governor Jeb Bush and the Republican controlled state legislature decided that the best way to improve the insurance situation was to deregulate some of the rates. In fact, a couple of major insurance companies threatened to leave the state if they didn’t. Some Republicans may have to as a result of new legislation.

The Republican legislators caucused with the insurance companies, got promises of fair play in return for flexibility, and wrote a bill that Governor Bush signed. A few days before the signing ceremony, State Farm announced a statewide 60 percent hike in homeowner’s insurance, while Allstate went public with the cancellation of nearly 150,000 policies. All of this was legal under the new law, which slashed insurance regulation in the interests of bringing new insurance companies to Florida. It appears to be another example of the grand concept of competition resulting in fair pricing, sinking the entire market.

The Republican leadership says it’s the capitalist way, let’s clear the path for more insurance companies to come to Florida. The question is, how many Floridians are going to be able to afford the rates? That raises the specter of state support for property insurance, but they’ve already tried that. The state supported Citizen’s Insurance, supposed insurer of last resort, sank last year in a perfect storm of red ink. The new law shifts one billion dollars of the debt accrued by this agency to the Florida homeowners over the next ten years.