Insurable electability

The Economist's recent survey of climate change touched on the subject of home insurance in America, and especially in Florida. State regulators set home insurance rates, meaning that insurers can't adjust pricing to reflect market events. You can kind of see why, to let homeowners predict housepayments year to year (though insurance is a trivial component of homeowner carrying costs and structured products would emerge quickly to manage the risks faced by insurers and insureds).

But in Florida, it goes further. The state subsidizes an insurer -- the Citizens Property Insurance Corporation -- that guarantees coverage to those whose insurers have gone bust, giving it the same kind of moral hazard that the Pension Benefit Insurance Company gives to the Bethlehem Steels and Delphis and American Airlines of the world. The difference, beyond that, is that wealthy homeowners in Florida have recently exerted a disproportionate influence on world events: the election of 2000. The Florida Republican Party and its governor Little Bush have put in place a taxpayer-supported mechanism that insures that it slim margin of dubious victory will be supported.