The State of Florida tried out a public option in property insurance. It was supposed to be an “insurer of last resort”, but it eventually began to compete with private insurance and quickly became the largest insurer in the state, insuring 30% of homeowners. Florida’s public option is backed by the government: it does not maintain sufficient reserves to cover its potential losses, and instead relies on the taxpayer in the event of a disaster. The state’s largest private insurer, State Farm, is now pulling out of the state. The government plan is not a monopoly yet, but these things take time.
In other words, the public option in property insurance has had exactly the same effect that critics say it would have in health insurance. It drives private insurers out of business.
(Via Instapundit.)
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