Insurers Exit Florida, California

Happy Friday! Our rule of thumb is that once an internet joke reaches Congress, it’s officially dead.

Rest in peace to “Barbenheimer.”

Quick Hits: Today’s Top Stories

• A federal judge rejected a request from Jacob Chansley—the infamous January 6 “QAnon Shaman”—to throw out his conviction for obstructing an official proceeding while rioting at the Capitol. Chansley received a 41-month prison sentence after pleading guilty in September 2021. Chansley cited footage—aired on Tucker Carlson’s Fox News show in February—of himself walking with Capitol Police officers, but U.S. District Court Judge Royce Lamberth concluded the footage was “devoid of context.”
• Republican Sen. Chuck Grassley on Thursday released an unclassified FBI document detailing a confidential informant’s unconfirmed allegations that then-Vice President Joe Biden received payments from Burisma—a Ukrainian energy company where Hunter Biden served on the board—as part of a scheme to protect the company from a corruption investigation. The FD-1023 form—an FBI document used to record unverified tips—includes allegations that Hunter and Joe Biden received $5 million each and references text messages and call recordings with the Bidens allegedly kept by Burisma’s owner, Mykola Zlochevsky.
• New York City agreed Wednesday to settle a class-action lawsuit over NYPD mistreatment of protesters during racial justice protests in the summer 2020. If a judge approves the settlement, the city will pay a total of about $13.7 million to 1,380 protesters involved in the suit. The city agreed in March to settle a similar lawsuit over a police crowd control tactic, and this settlement would maintain the NYPD’s denial of liability or serious wrongdoing.
• Ukrainian defense officials said Thursday any ship bound for Russian ports could be considered a military target, responding to Russia’s threats against ships heading to Ukraine’s Black Sea ports. The exchange of threats follows Russia’s withdrawal from the Black Sea grain export agreement Monday and bombing of grain storage facilities in Ukraine this week. The White House warned Thursday Russia may target civilian ships in its blockade of the Ukrainian coast.
• India’s Directorate General of Foreign Trade announced Thursday the country has banned exports of non-basmati white rice in a bid to keep domestic prices down ahead of elections early next year. The move will likely push global food prices higher, as 40 percent of world rice exports come from India—wheat prices are already climbing after Russia’s exit from the Ukrainian grain export deal.
• Iraqi protesters, responding to an expected Quran burning in Stockholm, stormed the Swedish embassy in Baghdad and set it on fire Thursday. Iraq also expelled Sweden’s ambassador and withdrew its own chargé d’affaires from Stockholm. The offending protest in front of the Iraqi embassy in Stockholm—organized by an Iraqi citizen who had previously burned a Quran in front of a mosque—went ahead Thursday, but did not include a Quran burning.
• The Department of Labor reported Thursday that initial jobless claims—a proxy for layoffs—decreased by 9,000 week-over-week to 228,000, their lowest level in two months. The drop indicates the labor market is still tight despite the Federal Reserve’s efforts to cool the economy with interest rate hikes.

Fleeing the Fire and Flood

Plagued by natural disasters and hostile regulations, insurance companies have been quietly retreating from natural disaster-prone states. Florida’s chief financial officer recently claimed insurance companies are fleeing the state because they’re “woke,” and Florida is, after all, “where woke goes to die.” 

We can detect only one flaw in this otherwise airtight logic—California, where “woke” arguably goes to thrive, is also hemorrhaging insurance companies.

Insurance companies don’t make for sympathetic protagonists, but they’re certainly having a tough few years in Florida. A population boom has produced lots of high-value properties that command high premiums, but also higher payouts in the event of disaster. And disaster has struck regularly in Florida of late, from 2017’s Hurricane Irma to last fall’s Hurricane Ian, which caused around $113 billion in damage, the state’s worst ever. Meanwhile, skyrocketing building costs thanks to inflation and pandemic supply chain disruptions increased the cost of payouts. The price of reinsurance—insurance for the insurance companies so they don’t go bankrupt when a major disaster strikes and requires mass payouts—has also climbed.

Florida homeowners pay about quadruple the national average for insurance, but it’s evidently not enough. The industry-backed Insurance Information Institute (III) reports property and casualty insurers haven’t earned profits in Florida since 2016 and posted a cumulative net income loss of $900 million last year. Eight small insurers have gone bankrupt in the last two years, and III spokesman Mark Friedlander told CNN 15 insurers have frozen new policies over the last 18 months, while 18 residential insurance companies are on a state watchlist for financial stability. AAA recently announced it won’t be renewing an unspecified number of policies in the state, and Farmers Insurance said it will stop offering company-branded policies at all.

Floridians have increasingly turned to the state-backed Citizens Property Insurance Corporation. The company’s policy enrollment is on track to reach 1.7 million by year’s end, making it the state’s largest property insurer—and at times, thanks to regulators’ price caps, the cheapest option. The company has asked regulators to let it hike rates 13.3 percent overall, but previously regulators have trimmed an 11 percent rate hike request to 6 percent.

Gov. Ron DeSantis has signed laws aimed at stopping the bleeding, last year creating a $1 billion reinsurance fund and raising barriers to lawsuits against insurance companies. III estimates Florida accounts for just 9 percent of the nation’s homeowners’ insurance claims but 79 percent of its homeowner’s insurance lawsuits. But at least for now, these steps aren’t enough. “Those improvements will take some time to fully materialize,” AAA said in a statement to CBS. “AAA, like all other providers in the state, are forced to make tough decisions to manage risk and catastrophe exposure.” III says it’ll take a while for the new lawsuit restrictions to improve things for insurers because nearly 300,000 were filed before the new rules took effect.

Florida isn’t the only state struggling—Louisiana shares the Sunshine State’s woes. Nine insurance companies have failed since Hurricane Laura in 2020, and Louisiana borrowed $500 million to pay claims for homeowners whose insurers failed and has begun offering subsidies to entice private insurers. Many homeowners have fled to a state-backed company—which raised premiums 63 percent in December—raising fears it’ll run out of cash in the event of a major disaster. The fast growth of these state-backed, last-resort insurers in other states including Florida, California, and Texas has raised similar concerns.

Even government-backed programs are looking to pass on the risks of insurance via higher prices. The National Flood Insurance Program—which offers taxpayer-backed coverage for floods that private insurers won’t cover—in 2021 began setting rates commensurate with homes’ risks. Those price hikes are still being phased in, but FEMA estimates the average cost of a year’s insurance for a single-family home will climb from $888 nationwide to more than $1,800.

While some insurance companies drown, others are choking on wildfire smoke. An estimated 76 percent of carriers decreased business in wildfire-ravaged Colorado in 2022, and Oregon officials scrapped a wildfire risk mapping plan after homeowners reported higher premiums. But California—where more than 7,000 wildfires burned more than 2.5 million acres in 2021—has the biggest problem. “The number of acres burned in California has grown steadily in recent years, as more people are moving into fire-prone areas of the state,” III said in a statement on insurers fleeing the state. “More homes in harm’s way—combined with rising costs of repairing or replacing houses either damaged or lost to fire—leads to increased insured losses.” Meanwhile, state law forbids insurers from passing along higher reinsurance costs and limits how quickly they raise premiums.

State Farm controlled 20 percent of California’s bundle home insurance market in 2021, but it announced in May it would halt sales of property and casualty coverage to new customers. Farmers Insurance and Allstate have quietly made their own cutbacks. “The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums,” Allstate told CBS in a statement. 

It’s still unclear what, if anything, California lawmakers will do about the situation. Democratic Rep. Maxine Waters has suggested everything from getting homeowners to clear brush around their homes and blocking new builds in high-risk zones to investigating whether insurance companies have violated antitrust laws. Others have suggested allowing insurance companies to request increases based on projected losses and homes’ locations—or trying to force State Farm to stick around. But for now, state regulators are projecting confidence the system can hold. 

“We don’t think” other companies will exit California, Michael Soller, a deputy commissioner for the state’s insurance department, told CalMatters. 

Back in Florida, elected officials are telling homeowners to hang on and hope for good weather until insurance companies feel confident enough to return. “I think they’re going to wait through this hurricane season and then I think they’re going to be willing to deploy more capital to Florida,” DeSantis said on the Howie Carr Show. “So, knock on wood, we won’t have a big storm this summer. Then I think you’re going to start to see companies see an advantage.”

No Labels Heeds No Warnings

Since its founding in 2010, No Labels has enjoyed a collection of bipartisan supporters touting its vision of across-the-aisle cooperation and common-sense solutions. The group has even chalked up a victory or two, creating the House Problem Solvers Caucus to bring lawmakers from across the aisle together to propose moderate policy compromises.

Now No Labels has a more ambitious idea: launching a third-party “insurance policy” ticket for the 2024 presidential election if it deems the major party nominees unacceptable. With few exceptions, polling suggests this could siphon Democratic voters, potentially giving former President Donald Trump a tight win in the event of a rematch against President Joe Biden.

Suffering heartburn at the thought of another Trump White House, some of No Labels’ biggest fans have turned against it. “In 2010, I helped start No Labels to foster bipartisan solutions to our country’s most important problems,” William Galston, one of the group’s founders, wrote in the Wall Street Journal in May. “Last month, after more than a decade, I felt compelled to resign in disagreement over its decision to launch a bipartisan presidential campaign.”

No Labels hasn’t specified exactly what scenario would trigger its insurance policy plan, though CEO Nancy Jacobson told Politico last month it likely wouldn’t run a ticket if Trump loses the GOP primary. At a New Hampshire town hall on Monday, No Labels signaled that it would put up a candidate by Super Tuesday if a Biden-Trump rematch appears imminent and if the public supports an independent alternative, though it didn’t share specifics on exactly how much support it would need to move forward. The group has also consistently dodged questions about who it would put on the ballot and how that decision would get made.

The town hall, co-headlined by Democratic Sen. Joe Manchin and former GOP Utah Governor Jon Huntsman, demonstrated that No Labels is continuing full steam ahead with its plans despite warnings from Democrats and Republicans alike. The $70 million operation has collected more than 600,000 signatures and is on track to make it onto the ballot in 20 states by the end of the year, according to a leaked conference call in which chief strategist Ryan Clancy updated funders on the plan.

Manchin is seen as the clear front-runner for No Labels’ ticket, although New Hampshire Gov. Chris Sununu and former Maryland Gov. Larry Hogan—who serves as a national co-chair for the organization—have also been floated. The West Virginia senator has consistently told reporters he hasn’t made up his mind on a ’24 presidential bid, although he declared on Monday that, “If I get in a race, I’m going to win.” 

The town hall also offered the first glimpse at the group’s platform, which is named after Thomas Paine’s 1776 pamphlet “Common Sense” and touts such ideals as open disagreement, compromise, and patriotism. The platform offers 30 policy position statements aimed at bridging the divide between two sides increasingly miles away on key issues. The list includes the double truism that “America is a nation of laws” but also “a nation of immigrants,” an “all-of-the-above energy strategy” that prioritizes nuclear power and strengthens domestic clean energy supply chains without fully eliminating fossil fuels, and a vague promise to “strike a balance between protecting women’s rights to control their own reproductive health and our society’s responsibility to protect human life.”

But there’s no guarantee a slate of middle-ground positions will attract even voters who consider themselves moderates—political scientists have long acknowledged that such self-described moderate voters do not necessarily subscribe to a menu of moderate positions. Instead, they tend to favor a diverse array of positions across the ideological spectrum that “average out” to the political center.

Unconvinced by No Labels’ utopian centrist vision, Democrats are panicking about the possibility of a third-party ticket undermining their candidate. The Washington Post first reported that a number of top Democratic strategists and anti-Trump Republicans held a secret meeting last month at Third Way, a centrist think tank vehemently opposed to No Labels’ plan, to map out how to oppose the group. Third Way and The Lincoln Project have been firing on all cylinders to paint No Labels as a threat to democracy.

No Labels’ own polling shows that a third-party ticket would pull more support from Biden than from Trump. That conclusion has been corroborated by Citizens to Save Our Republic, a bipartisan Super PAC launched by former House Democratic Leader Dick Gephardt with support from prominent leaders like former Democratic Senator Bill Bradley and Republican former defense secretaries Bill Cohen and Chuck Hagel. The Super PAC announced polling results Monday showing a No Labels ticket would lead to Trump narrowly defeating Biden in a 2024 rematch.

“If these were normal times, I would have no trouble with the No Labels third party ticket,” Gephardt tells TMD. “These are not normal times. We avoided having a broken election in 2020 by a whisker. If Mike Pence and six or seven state election officials had not resisted the pressure from former President Trump and others, we would have had a broken election. So that to me is a danger that makes what No Labels is doing dangerous.”

New crosstabs from Monmouth University, released yesterday, complicate the idea that a third-party ticket would disproportionately hurt Biden, instead finding that an independent campaign would barely change the outcome. When those researchers tested support for a Manchin-Huntsman ticket, the campaign actually pulled more support from Republicans than Democrats. The findings track with public opinion polling, which has found that 2020 Biden voters harbor more negative views of Manchin than Trump voters do—though it’s hard to say how many voters who like the idea of a third-party ticket would vote for candidates with little chance of winning.

Former Democratic Sen. Joe Lieberman, the founding chairman of No Labels, has vowed to pull the plug on a third-party ticket if it becomes clear that it has no viable path to winning—and if continuing would clearly boost Trump. The group says its state-by-state polling proves broad support for an independent option in ’24—but political operatives who oppose Trump aren’t convinced. They’re worried the group will always find a way to slice the data in its own favor, with potentially disastrous results for the country.

Lucas Holtz, a political analyst at Third Way and former Lincoln Project strategist, is “skeptical” No Labels will follow through on that promise because it has yet to release its state polling. He says the group’s decision not to disclose its donors—the subject of a lawsuit from Arizona Democrats—further signals its lack of transparency and trustworthiness.

“Even if the data conclusively demonstrates—as it did in their September 2022 poll—that they will spoil the election, I don’t believe that No Labels will pull the plug at that time,” Holtz tells TMD. “Because they will find some way to square up the data and make it so that they can run a third-party candidate, which is why we keep putting pressure on them. 

Worth Your Time

• Director Christopher Nolan—like the titular character in his blockbuster film, Oppenheimer, released today—built his own little city from scratch in New Mexico. “If he wanted to film Los Alamos as it had existed in the 1940s, completely forgoing the ubiquitous modern filmmaking tricks of computer-generated imagery (CGI) and green screen, he’d have to emulate the very project he was writing about,” Jada Yuan writes for the Washington Post. “He’d have to go out to a remote desert somewhere and build it himself. They had just three months to get ready for a film that would shoot in just 57 days and run three hours, Nolan’s longest yet. After location scouting throughout the Southwest, Nolan and his crew built the town on a completely untouched section of Ghost Ranch, an educational and spiritual retreat about an hour and a half north of Santa Fe, made famous by the painter Georgia O’Keeffe. There, they found exactly what they wanted for their Los Alamos: a plateau on a ledge high above the desert with nothing else around. ‘When I brought Chris there, he said, ‘This is very epic,’’ De Jong recalls. ‘You felt like, ‘No one will find you here.’ There’s no one. The rest of the world is happening and going on, and we’re doing this thing that we think will save humanity.’’” 
• In the heartbreaking cover story for this month’s New York Times Magazine, Robert Kolker tells the story of a family of nine siblings, each of whom had a 50-50 chance of possessing a genetic mutation that causes incurable frontotemporal dementia (FTD) in middle age. “They had all inherited, in essence, a coin flip,” Kolker writes. “Those who don’t carry it are in the clear, and so are their descendants. Those who do will develop FTD, and they pass along that same 50 percent risk to each of their children. ‘I had a 4-year-old and a 2-year-old at that time,’” the youngest, Barb, told Kolker after researchers discovered the mutation. “‘I remember thinking, I shouldn’t have had my kids.’ She stopped short as she recalled this, then collected herself. ‘Which is, like, a very hard thing for a parent to think. It’s a devastating feeling—that I may have passed something to them that could hurt them.’” While some siblings and their children decided to get tested, others preferred to live without knowing if they carried the mutation. “Barb was tested, going in for the blood draw that would tell the story of the rest of her life. The clinicians required patients to receive the news, good or bad, in person. But Barb never went back to hear the results.”

Presented Without Comment

Wall Street Journal: NFL Fines Dan Snyder $60 Million After Approving His $6 Billion Sale of Washington Commanders

Also Presented Without Comment

Quartz: A teen allegedly swatted a Ford plant so his friend could get a night off work

Toeing the Company Line

• In the newsletters: Nick argues (🔒) the push for “popular constitutionalism” on the left is just as misguided as the “common-good constitutionalism” from the post-liberal right.
• On the podcasts: Sarah is joined by Mike and Kevin to talk Trump’s ongoing legal trouble on the Dispatch Podcast, and on Advisory Opinions, Sarah and David discuss the Supreme Court’s architecture and what it means for ordered liberty with District Judge Charles Eskridge. 
• On the site: Thomas explores whether experts think AI is truly a threat to humanity.

Let Us Know

What do you think of No Labels’ prospective plan to provide a back-up candidate in 2024?