Florida can’t seem to catch a break. The Democratic Party cuts our delegates to half a vote at the convention, and now a massive all-states study gives us an “F” in insurance.

 

The authors of the report stressed that an “F” was not an attack on a state’s insurance department. Conversely, a grade of “A” should not be considered an endorsement. Readers were to regard both grades as reflections of the laws under which the states operate.

 

But it’s hard not to take the dismal score personally.

 

Not only did Florida earn the lowest grade possible — along with California , Maryland , North Carolina , and Massachusetts — the statisticians dropped the Sunshine state from its scoring methodology altogether, claiming that Florida , along with Massachusetts and North Carolina , were messing up the grading curve. An excerpt from the report explains the logic:

 

“In all three states, insurance rates are determined entirely through the political process. We penalized those states heavily, and doing so distorted the standard deviation upward a great deal. Removing those three states from the standard deviation calculation resulted in a more normal curve.”

 

The study, a collaboration of the Competitive Enterprise Institute and the Heartland Institute, focused on the regulatory environments of homeowners’ and automobile insurance. Contributors included Matthew Glans , a legislative specialist for Heartland; Drew Thornley , economic freedom policy analyst for the Texas Public Policy Foundation; Ned Andrews, a Virginia attorney; and Dan Sutter, a professor at Texas Pan-American University. CEI Policy Analyst Michelle Minton assisted in developing the ranking system.

 

A state’s ranking was predicated on two key considerations: how free consumers are to decide what insurance products will meet their needs and how free insurers are to provide products that meet consumers’ real or perceived needs.

 

The report used numerous variables, such as residual automobile and homeowners insurance Markets, market volatility, market concentration, form regulation, rate regulation, credit scoring and territorial rating to make the judgments. Data was almost exclusively derived from 2006 and the resultant assessments refer to that calendar year.

 

The excerpts provided below were reprinted directly from the report with permission and encapsulate the reasoning for Florida ’s failing grade. The entire report can be viewed at www.cei.org.

 

The Underachiever

Florida comes in near the very bottom of our ratings, almost entirely because of its unusually intrusive homeowners’ insurance system. Since Massachusetts announced it would stop dictating the rates that insurance companies charge beginning this year, Florida has emerged as the only state that directly dictates insurance rates through state action. To a large extent, Florida ’s regulatory over-stretch remains limited to its homeowners’ insurance market.