Where is the Market? Where is Competition?
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That is the question the property insurance customer asks in a great Bay News 9 clip. Property insurers continue to drop customers, forcing them into Florida’s “public option” of Citizens Property Insurance.
In what seems like a no-brainer to most of us, we know that if the government promises to provide a good or service, and sets the price of those goods or services 40% of more below market value, then of course, any wise consumer will choose the cheaper policy and any wise insurance company executive will drop those customers because they can’t compete in what has become a socialized market. This logic applies to health insurance, education, cap and trade, or any other real or proposed government run program.
But, the catch that many, from both parties who support programs like this, don’t want to tell you is, the cost is on all of us. For example, Citizens Property Insurance has billions of dollars worth of policies that they do not have the capital to pay. That’s real, that’s true. If Hurricane Charlie hit Florida again, Citizens would not have the money to pay the claims. But, they do have the power of taxation. So if and when the storms occur, not only will Citizens deplete the Treasury, they will then ask the Legislature to raise taxes, fees, and revenue bonds to pay the $12 – 16 billion in debt. However, in today’s credit market, how likely a bond offering would raise the money is suspect. Therefore, you can bet they will raise taxes.
The ominous parallel at the national level is both the “public option” for health care and the auto bailouts. Businesses will look at the “public option” coldly and rationally. If it costs less to pay the fine and send their employees into the government run system, they will do it, plain and simple. Many businesses currently squeeze 1 or 2% profit per year and know, to the penny, the cost per employee. If the “public option” will drop that cost, they will take it. You and I would do the same thing to ensure the survival of our business and the well being of our families. In the auto industry, if a company knows that the government is backing their efforts, then the incentive to earn a profit, pay dividends, and make a quality product are secondary to securing government support. It would be a scary day in America if “Government Motors” could sell a vehicle far below market value, driving other companies out of business, financed by the debt or obligation of the American taxpayer.
Sound far fetched? It is happening in Florida as the State drives private capital and private insurance out of the market by undercutting competitors and falling back on the taxpayer.
Private enterprise, means private capital, means private sector jobs, means private sector competition, means lower prices and more choice. As one of our fellow citizens said in the story above, “Not all the companies are strong,” Hatala said. “Just because they accept the premiums doesn’t mean they can pay the claims.” It is time to end the smoke and mirrors and give taxpayers and consumers real choices, in real markets, with real competition.
