Bob Hartwig: Insurance premiums should match the risk

Dec 13, 2010

The following Letter to the Editor from Insurance Information Institute President and CEO Robert Hartwig was published on December 12, 2010 in the Orlando Sentinel:

Insurance premiums should match the risk

Columnist Mike Thomas proves once again that he understands the depth of dysfunction within Florida’s current insurance market. His recent column (“Brace for storm of property insurance rate hikes,”, Dec. 4) underscores the precarious predicament of over-reliance on a socialized property insurance plan, one based on bailouts rather than facing the reality of the state’s vulnerability to massive insured losses from major hurricanes.

However, he states that “insurers make money by charging higher rates.” Well, so does every other business in the world. And, just like all businesses, insurers cannot stay in business by charging less than what it costs to offer a product. The insurance product is a promise to take on the risk associated with a particular property and pay losses if and when disaster strikes, and disaster strikes Florida more than any other state.

Insurers strive to charge the appropriate premium — one that matches the risk. Insurance prices will drop only when the risk level does, which first requires a commitment from all Floridians to construct and retrofit buildings that stand up to a beating from hurricane-force winds.

Robert Hartwig President and CEO, Insurance Information Institute

Find this letter at:,0,5599294.story