Wednesday, January 24, 2007

Free Insurance Money for Everyone!

Unless you've been living under a rock here in Florida, you know by that Charlie and the populists (the legislature) have caved in to the "we MUST be subsidized" forces, and soon the Sunshine State will have the most socialized version of home insurance in the country.

From the Orlando Sentinel.

'TALLAHASSEE -- Lawmakers approved a sweeping package aimed at cutting the cost of homeowners insurance in storm-battered Florida but quickly drew heat from consumer groups that say it fails to go far enough to help those staggered by two years of soaring increases.

The wide-ranging legislation is expected to cut rates for property coverage anywhere from 5 percent to more than 40 percent.'

Wow - sounds great! But how does this get paid for?

'But with the state poised to shoulder a larger role in hurricane rebuilding, homeowners could face far bigger bills if another round of major storms pounds Florida.

"At first blush, it's kind of frightening," Senate Banking and Insurance Committee Chairman Bill Posey, R-Rockledge, said of the state's balancing act.

Still, he insisted higher risk was needed to lower bills now."

If you assume there wasn't going to be any relief, these people were going to be bled to death in the next year or so," Posey said. "We tried to stop the bleeding."'

In other words, you took a short-term minor gain for long-term major risk. Like everyone else.

'The House approved the legislation 116-2 and the Senate 40-0, ending a weeklong special session. Republican Gov. Charlie Crist, who repeatedly promised rate cuts during last fall's campaign, is expected to sign the measure into law.'

The last time I witnessed a state legislature vote so overwhelmingly on a hugely important, far-ranging issue? California's deregulation of their electricity market in 1996. And now a history lesson from the recent past...

Similar to our current insurance crisis, people in the Golden State were constantly complaining about their electricity rates being too high. In actuality, it was the commercial users of electricity that did the most complaining. On a per household basis, residential californians use less electricity than in any other state - purely due to the mild climate.

Enron, then a growing tiger in the gas and electricity trading markets, was only too happy to step in and provide the state with a heavy-duty lobbying campaign, telling the state everything they wanted to hear, "Open markets will create competition, and competition will mean lower rates for all!". So, when it came to a vote on giving away the franchise and opening the state's electricity lines to competition, how did it go? Senate 40-0, Assembly 80-0, and passed shortly thereafter by governor Pete Wilson (R).

Unfortunately, just like the baboon-ass monstrosity that just passed in Tallahassee, the lawmakers simply didn't know what they were getting into. It wasn't true deregulation - it's just not possible when everyone has to use the same power lines. It was purely a gamble, based on doctored numbers and charts presented by private parties (Enron) who stood to gain the most from legislation.


As it happened, rates did NOT go down for residential users, and only the largest commercial/industrial users were able to negotiate lower rates. Enron, on the other hand, made a BOATLOAD of money from the scheme, manipulating the grid, causing market rates to sky-rocket. The fox was guarding the henhouse, and getting plenty fat from it.

Fast forward to 2000, due to "gaming" of the power grid by private marketers and a record heat wave, rates went through the sky, while large segments of the state experienced blackouts. In 2001, the new governor Grey Davis (D) started the year with a state of emergency (which stayed in effect for nearly 4 years), and a new round of rolling blackouts and skyrocketing rates hit during the surmmer, while the state's largest incumbent electric utility, Pacific Gas & Electric, ended up in bankruptcy.

Finally, the game was over - the state was forced to buy out the numerous contracts for huge sums of money. In the end, rates were jacked up for everybody (much more than they were paying before the deregulation experiment) and Grey Davis got booted out for a perceived "lack of response" during the crisis.

California Energy Crisis

Think something like this won't happen in the Sunshine State? Be honest. El Diablo just got himself another big fat contract.

Full Sentinel Article

59 comments:

CRAZY G said...

Jerry!
The focal point should be; what are the private insurers going to do NOW, with this new legislation...

Citizens has got approximately 1/3 of the policies, and it certainly appears they will be having more....

Your dire predictions of a socialistic 'big brother', may come to pass in a few years....

May your god "SAVE THE CRIST", so he can save you!!!

jayz said...

I could almost support this crap if it worn't for one thing:

These subsidies apply across the board. No matter how many properties you own, no matter if you live there or not, no matter how likely your place is to get damaged by flood/wind.

That means super-wealthy owners get a HELL of a lot more free money than the average Joe Sixpack with a 1600 square foot place in Deland.

Anonymous said...

Your first mistake is expecting a politician to solve the problem.

Wayne said...

Jerry, just curious - what approach to solving Florida's insurance crisis would you favor? I have a solution, but unfortunately it's not very feasible. It involves turning back the clock 50 years and preventing reckless and stupid coastal development.

The biggest mistake the legislature made may be letting citizens get into the auto insurance biz. Customer service is not the government's strong suit, and, unlike health insurance, auto insurance is one line the private sector actually does pretty well. The pols would have been better off sticking to the reinsurance biz.

What jayz said about the unfairness of the across-the-board subsidy.

CRAZY G said...

Wayne, I think you're 'dead-on' about building on the beaches, etc...
I think the county commissioners were eyeing the revenue it would bring in, in taxes, and as long as the insurance companies 'then' would insure it, everything was OK....
WELL!!! All stories "DON'T" have a happy ending...Unfortunately, even Crazy can't forsee how it's going to evolve

jayz said...

I'm with all of you - this is state-run welfare for all the rich idiots who demand to live on waterfront property.

The only people who should live on the water are those involved in sea-faring trades. That's the way it was for 5,000 years, and for some reason the past 100 years people have gained too much hubris and want to fight mother nature.

Dumb-asses.

CRAZY G. said...

Things are going to get NASTY, if you can read between the lines of a D.R. Horton executive statements on a recent conference call....
===================================

Question: What do you see or what do you hear as it relates to private companies, smaller companies? I know we can all see here the public builders but what do you see as to... the suffering going on within private companies that might be more leveraged than all you public players?

Answer: Actually, Horton and I were talking about that the other day and I don't think they are suffering nearly as much as they are going to be suffering in the next 12 months because the large homebuilders are just now beginning to put back the lots to the developers. I don't believe the banks have cut back nearly as much as they are going to on those small and medium-sized builders. I think they are operating in a period of euphoria currently and I think that is about to change because clearly as we drive down our prices and drive down our incentives and so forth, I think we are going to make the market much more competitive on them and as you know, they don't have the staying power. I think at some point the commercial banks have got to say you are not going to get the next loan. It is going to happen, but it just hasn’t happened on a large scale yet.
================================
CRAZY SAYS: Ouucch! YOU'VE JUST HAD FAIR WARNING!!!!!

CRAZY G said...

Put the cards on the table here, and call a spade, a spade!!!
For the last couple of years the builders have been hitting the sweet spot, above $300K....WELL!! That market is saturated with inventory, and they know "IF" they want to sell houses, they are going to have to be priced lower...
Building materials are down 30-40% in the last 1 1/2 yrs....Lot prices have been "UP"...But, they are trying to unload those expensive lots, by giving them back....
SSOOO!!! BOYS AND GIRLS!!!
What's the next big item on the cost list.....You guessed it ..."""LABOR""
Lennar has already told it's sub-contractors to cut prices....
And others are sure to follow....

BOTTOM LINE IS THOSE ""ILLEGAL"" MEXICANS MAYBE TAKING SOMEBODY'S JOB, that doesn't want to work for minimum wage....
THE HANDWRITING IS ON THE WALL, AND IF YOU CAN READ SPANISH, YOU'LL KNOW WHAT IT SAYS

Anonymous said...

I fail to see how this recent insurance proposal is good for Floridians over time.

Anonymous said...

I've lost the link to the reported online newspaper article by the Naples real estate association's notice that it will no longer report its sales association numbers. Does anyone still have that link?

jayz said...

Try this.

Lying Bunch of Scam Artists in Naples

CRAZY G said...

WELL!!! It certainly appears the verdict is in for Palm Beach County..

For calender year 2005, there were 13679 sales vs 8454 foreclosures

Well guess what, in 2006, there were 8640 sales vs 10915 foreclosures....

YES FRIENDS, THERE WERE MORE FORECLOSURES THAN SALES IN PALM BEACH COUNTY....

Here's that data from FAR!!
http://media.living.net/statistics/2006/2006%20Yr%20End%20Sin%20Fam%20Ex%20Chart.pdf

zippo said...

Haven't posted in awhile, but that is a BEAUTIFIC statistic for Palm Beach.

More foreclosures than sales - awesome blossum.

Anonymous said...

more foreclosures than sales?
the party is over. Here comes the hangover.
hahahahahahahaha

ft lauderdale said...

Ok, am traveling in vancouver, the building is out of control here.. but that is off topic, questions for the long term residents

What happened to rates post andrew? were the increases the same? and is there a good resource on the insurance issue to read?

CRAZY G said...

ft lauderdale reply;

I was living in Palm City[Stuart], at the time, and yes my rates nearly doubled....

>>>THEY WENT FROM $275 to nearly $500<<<

I don't think you can buy insurance now from State Farm who was our agent at the time
So I'd guess the answer is moot!!!

CRAZY G said...

Well it's offical, Gov. Crist signed the legislation in No.Palm, on somebody's front porch...
I looked up the Isiminger's address, and I know approximately where it is....I't an older OK neighborhood of ticky tacky 40-50 year old houses, off Prosperity Farms Road, just north of North Lake Blvd...Where the Isimingers had been paying $6,600 a year insurance, supposedly NOW will be paying $3450 [?]
The article in the Palm Beach Post gives good credence to ""YOUR IN GOOD HANDS WITH CRIST"...

He did say..."""HELP IS ON THE WAY"""

Crazy might add: 'YAH I'm here from the government, and I here to help'

http://www.palmbeachpost.com/state/content/state/epaper/2007/01/26/m1a_CRIST_INSURE_0126.html

jayz said...

Standby for the next "giveaway" - doubling of the $25K homestead exemption.

In other words, out-of-staters and renters will have their taxes doubled.

And Charlie & the Populists (love the name, Jerry - could be a great name for a punk band) next want to give free tax money to current homeowners if they want to move. Screw the rest of you.

I love this frickin' state. Frickin' jagoffs.

CRAZY G said...

Does reading a newspaper make any sense some times....I mean comeon!!!!

===================================

Sales of New Homes Plummet in 2006
Friday January 26, 10:43 am ET
By Martin Crutsinger, AP Economics Writer
New Home Sales Plunge by Largest Amount in 16 Years


WASHINGTON (AP) -- Sales of new homes plunged in 2006 by the largest amount in 16 years as the nation's housing industry suffered through a sharp contraction after five boom years.
However, there have been some signs that the steep slide in housing may be coming to an end. For December, new home sales were up 4.8 percent, the second strong monthly gain after a 7.4 percent rise in November.

==================================

Sales "PLUNGED" by most in 16 years, ""BUT" they were ""UP"" by 4.8% in Dec, and by 7.4% in Nov....

Then you wonder why I'm CRAZY!!!

CRAZY G said...

Then CBS MarketWatch reports, it's the highest since April....


NOW, I REALLY GOING BALLISTIC, WATCH OUT!!!

==================================

New-home sales rise to highest since April
Warm weather boosts sales in Northeast, Midwest
By Rex Nutting, MarketWatch
Last Update: 11:33 AM ET Jan 26, 2007


WASHINGTON (MarketWatch) -- U.S. sales of new homes jumped by 4.8% in December to a seasonally adjusted annual rate of 1.12 million, the highest level since April, the Commerce Department reported Friday.
Warm weather at the end of last year, along with low interest rates and aggressive discounting by builders, boosted sales far beyond the 1.07 million rate that economists surveyed by MarketWatch had expected. See Economic Calendar.

CRAZY G said...

Very good article in the Palm Beach Post, where an insurance industry spokesman basically admits 'defeat'....

SSOO!! Crazy's question remains;

WHAT NOW!!! BROWN COW????

What is the private insurance industry going to do, now that state has them marked for competition.....

Do they just fold up their laptops, and head north to colder mclimates, since it just got to hot for them down here!!!

Read the Post article for yourself;

http://www.palmbeachpost.com/politics/content/state/epaper/2007/01/27/a4a_crist_0127.html

CRAZY G said...

Jerry:
You got a great thing going here but you need MORE titillation of subject matter to elicit response...

"IF" YOU WANT ME TO CEASE so this blog survives...so be it!!!

CRAZY G said...

Crazy has been beating the drum, on the topic of all the empty houses, and had forcasted that they ultimately would be occupied by the homeless....
Well, here you go, from the 'other' blog
===================================
Comment by DannyHSDad
2007-01-28 10:25:36
Miami’s “Liberty City” — I just saw an intro to this “city” on Today (NBC). Here’s a good article on it:

Rather than shut down a Liberty City homeless camp with a new law, the Miami City Commission chose to focus on finding homes for its residents — who celebrated the decision at the village.

So will these homeless people start moving unto (”reclaim?”) all those empty “ghost” condos and homes in Miami (and surrounding area)?

Reply to this comment
Comment by Jerry from Richardson
2007-01-28 10:52:13
Your new neighbors in that $600,000 condo you just bought are Section 8 tenants. LMAO

===============================

AND YOU PROBABLY THOUGHT CRAZY WAS 'NUTS'

LOL!!!!

Anonymous said...

I really resent that they've added a tax on my auto insurance to bail out Citizens.

CRAZY G said...

I would write your congressman, and see "if" he really gives a toot about what you think....
They've made up their minds, and that's the way it's going to be....

>>>""NOTICE, IF YOU WILL, THE TOTAL LACK OF COMMENTARY BY THE INSURANCE INDUSTRY ITSELF, AS TO WHAT JUST HAPPENED""<<<<

I think, you/we are in serious trouble here, and ""NOBODY"" is even making a peep of a noise about it....

CRAZY G said...

Crazy keeps on repeating about all the empty houses on the market.....
Well, here's somebody that must be just as crazy, as CRAZY!!!!
===================================

Number of vacant homes for sale surges 34%
Homeownership rate unchanged near 69%, Census Bureau says
By Rex Nutting, MarketWatch
Last Update: 3:10 PM ET Jan 29, 2007


WASHINGTON (MarketWatch) -- The number of vacant homes waiting to be sold surged 34% to 2.1 million at the end of 2006 compared with the end of 2005, by far the fastest increase ever recorded, the Census Bureau reported Monday.
A year ago, 1.57 million homes were vacant and awaiting a sale.
The vacancy rate for owned units jumped to a record 2.7% from 2.0% a year earlier. From 1965 to 2005, the homeowner vacancy rate had never been above 2%. The long-term average is 1.4%.
"We have more than a million housing units of excess supply," said James O'Sullivan, an economist for UBS. "If you are looking for evidence that the worst is over for housing, you're not going to find it in this report. This argues that housing starts need to go down more."
In the past 12 months, housing starts have slumped 18% to a seasonally adjusted annual rate of 1.64 million.
In 2006, the number of housing units in the United States rose by 2.14 million, or 1.7%, to 126.7 million. The number of units occupied, however, rose by less than half as much -- 1.04 million.
Meanwhile, the homeownership rate (the percentage of homes occupied by their owners) was essentially steady at 68.9%, the government said, close to the all-time high of 69.3%.
With so many vacant homes for sale, owners will begin to offer them for rent, said Asha Bangalore, an economist for Northern Trust. If the supply of rentals rises, rental prices should begin to come down, helping to bring down core inflation. Read more on the rental market.
"That means a quicker change" in the federal funds overnight interest rate, Bangalore said.
Rents have a double impact on core inflation, because they are used to calculate owners' equivalent rent, which accounts for nearly a fourth of the consumer price index. In 2006, owners' equivalent rents rose 4.3%. Core inflation excluding owners' equivalent rate decelerated to 1.9% in 2006, O'Sullivan said.
Rex Nutting is Washington bureau chief of MarketWatch.

http://www.marketwatch.com/news/story/number-vacant-homes-sale-surges/story.aspx?guid=%7bA09A933D-57BA-4583-BDF7-6E000DF9E74D%7d&print=true&dist=printBottom

FL - Paradise Lost said...

Great one, Crazy. That'll be today's report.

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