Homeowner Insurance Policy Responses to the 2004/2005 Hurricane Seasons in Florida and Louisiana: Why the Difference?

• In Event: 118 - Section on Economic Sociology Refereed Roundtable Session and Business Meeting
  In Refereed Roundtable 60min: Table 15. Political Economy of Regulation

Abstract

In 2004 and 2005, a series of hurricanes caused record homeowner insurance losses in Florida and Louisiana. Despite comparably sized losses, the two states reacted differently. Florida expanded the public provision of residential insurance whereas Louisiana actively suppressed public and promoted private insurance provision. Why the different policy responses? The qualitative tracing of the policy processes in the two states suggests that the state-specific distribution of the material hurricane damages, interest group competition over policy solutions to the resulting costs, and shifts in the dominant evaluative logics employed by legislators combined to shape the different state policy responses. Uncertainty regarding the optimal policy responses prevented policymakers from forming efficient-rational policy responses and required them to adopt solutions implied by alternative available institutional logics. In Florida, broadly distributed hurricane damages lead the public to frame insurance affordability and availability issues as a societal problem of market fairness. Although lawmakers initially ignored this definition of the problem, the growing de-legitimization of their pro-market policies and electoral pressures eventually led them to adopt the public’s framing and expand subsidized, state sponsored insurance. In Louisiana, the more concentrated hurricane impact on a more disadvantaged segment of the population never enabled the framing of similar affordability problems as a problem of fairness to gain public prominence. The absence of a legitimate institutional alternative left lawmakers to pursue policies suggested by the dominant efficiency and pro-market logic. These findings highlight the advantages of institutional over exclusively rationalistic explanations of economic outcomes under conditions of uncertainty.

Author

• Emanuel Ubert, University of Madison-Wisconsin