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Spot the deliberate mistake

Dear friend,

The great Florida flim-flam rumbles on…

Check out this article in the St Petersburg Times by Christopher Kise who is a counsellor to Gov. Charlie Crist.

Reforms mean insurers compete

I don’t want to spoil the surprise for you, but it made my blood boil. Suffice to say it is a puff piece about how great the new Governor of Florida is and how brilliant he is at commanding the winds, the seas and homeowner insurance premiums to abate.

But spot the deliberate mistake in the following passage:

“Faced with mammoth rate increases and the realization that, like it or not, Florida was already in the insurance business, Gov. Crist chose wisely to lead the state in a new direction.

“Under the new law, government displaces to an extent and for a limited time the overpriced, highly profitable private reinsurance market. Far from an abandonment of the free market, this responsible solution both lowers rates and induces free-market competition…”

The overpriced, highly profitable private reinsurance market.

The audacity and outrageousness of the statement takes a while to sink in, I say again;

The overpriced, highly profitable private reinsurance market?

Which highly-profitable reinsurance market is that?

Is that the same reinsurance industry that overall has struggled to return more than cash over a 20-year period? Or the same reinsurance industry that will have shouldered a large chunk of Florida’s $36bn in losses of the last 3 years? Or the same business that has shares of its leading incumbents trading on lowly single-digit PE ratios?

So Florida realised it was in the insurance business — well low and behold, now it is in the reinsurance business too!

Good luck to Florida — it looks like it is going to need all it can get!

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