There are two major problems with the insurance industry in Florida.

Insurance companies are liable for billions of dollars that would be difficult for any company to pay. But more importantly, the way these companies are run is a major problem. Wisely run, insurance companies would probably be able to pay out the policies they insure in active hurricane seasons. But insurance companies aren’t wisely run. The reason why is because they don’t need to be – demand for their product is guaranteed by law.

The result is that homeowner’s insurance is a mess in Florida. Florida governor Charlie Crist wants to fix it, but the bill he signed Thursday has a low chance of success. But the problem isn’t solely with how the insurance business is run. In fact, the problems Floridians have with homeowner’s insurance aren’t even a surprise – any time an industry’s demand is mandatory, there’s bound to be trouble – especially when that industry becomes liable for billions of dollars in damages.

How much Floridians might save thanks to Crist’s bill is uncertain. According to Forbes, “estimates range from five percent for many inland customers to nearly 20 percent for others, particularly those on the coast,” where hurricanes cause the most damage due to storm surge. The five to 20 percent savings will only take a small bite out of homeowner’s insurance rates, which have doubled or even tripled for many customers. Essentially, many customers are paying $3 now for every $1 they used to pay. Crist has made it possible for them to save, at most, enough to buy a soda out of a vending machine.

The method by which Florida is going about these savings isn’t much better. “The bill forces an immediate rate decrease for Florida’s largest insurance company, state-created Citizens Property Insurance Corp., and cancels a planned increase for the company.”

The problem with that idea is that Citizen’s is already losing billions of dollars. It lost $2 billion in 2004 and 2005, according to the Florida Insurance Council. Citizen’s is already essentially bankrupt, and the money Floridians save thanks to Crist’s forced reduction will make Citizen’s increase its debt.

Crist’s bill makes certain forms of coverage optional, such as insurance against wind damage, but what really needs to happen is for Crist to make all insurance optional. If Floridians don’t want insurance, they shouldn’t be forced to buy it. And if disaster strikes, the Floridians who made the choice not to buy insurance shouldn’t complain.