Dear Friend,

Check out Governor Grist’s open letter to his insurance commissioner Kevin McCarty explaining why he is invoking emergency powers to impose an insurance rating freeze and a moratorium on non-renewals.

The rating freeze is one thing, and I’m no contract lawyer, but surely forcing fixed-term contracts to be renewed is illegal?

It takes two to tango. An insurance contract needs two willing parties, a consideration, a promise to indemnify, as well as an agreed timeframe.

The contracts that the Floridian insurers entered into had expiry dates and these must be honoured. The ultimate sanction for any (re)insurer is the ability to walk away from a disadvantageous deal. The same goes for the client – they can walk away if they find a better deal next year.

Such a right cannot be removed at the stroke of a pen, however it is dressed up.

“Come to sunny Florida! The land where you can’t set your own prices and you can’t even walk away from last year’s deal!”

What’s next? Price controls for gasoline, or bread?

How about medical costs or college fees? They’re always going up by more than inflaton.

All industries use contracts — if you stop honouring them, you’re on the way to becoming a basket case.

Our new reporter, Mairi Macdonald has just walked in from a political risk seminar. It was about Nigeria Russia, India, China, Venezuela — all the usual emerging market suspects.

I asked her if anyone asked anything about Florida?

I’m cooking up my own solutions to the Florida crisis. I’ll let you know when I have them clearer in my head.