The recent news that Colorado State University plans to shut down Professor Emeritus William Gray’s hurricane predicting center should not come as a surprise. The center has for many years been funded by the insurance industry and served its purpose of whipping the press into a frenzy so that the insurance industry could rake in billions of dollars of excess premiums. Professor Gray’s predictions were no more accurate than your corner psychic, and frequently were “revised” mid-season to make them look less ridiculous.
Professor Gray’s Chicken Little routine was critical to the insurance industry as it attempted to explain the constant rate increases in Florida despite the lack of hurricanes. But like all good ruses, this one became stale, and the insurance industry has turned its money to new organizations and “think tanks” to do its dirty work. For example, the new “R Street Institute”, funded by the insurance industry, came up with such inventive “fixes” for Florida’s property insurance market as curtailing policyholders’ ability to sue insurers for bad faith. The R Street Institute’s report is so biased in favor of the insurance industry that its very premise (“Ten Reforms to Fix Florida’s Property Insurance Marketplace — Without Raising Rates”) is a joke. After eight years of no hurricanes and yet huge year-over-year rate increases, the insurance industry’s “think tank” is brain storming ideas to keep the inflated rates from returning to normal, while reducing claims payouts. How about someone “thinks” about the possibility that rates could go down?
The politicians are typically the last ones to admit they have been duped, particularly as the insurance industry donation checks keep rolling in. But Florida’s Chief Financial Officer Jeff Atwater has been holding the industry’s feet to the fire. And you can be sure ever-increasing insurance rates will be one of Charlie Crist’s main campaign themes as he seeks to regain the governor’s mansion. Floridians will be hearing a lot about property insurance during this campaign, and the issue could be the deciding factor in the 2014 Florida governor’s race.
The last time Crist and Atwater got together to take on the insurance industry was back in 2008, when Crist was governor and Atwater was Florida Senate President. Both were Republicans at the time, and shared fierce independent streaks and a distaste for insurance industry lobbyists. If Crist wins in 2014, a reunited, bipartisan Crist-Atwater team would be bad news for the insurance industry. But regardless of who wins the election, I predict that the insurance industry will be battered during the campaign, and will finally find itself on the ropes after several years of favorable political conditions in Florida.
After years of predictions that the sky is falling, the chickens are finally coming home to roost.