House Speaker Rubio pushes aid for small insurers

Feb 29, 2008

He seeks $250-million to provide loans to smaller state companies.

By TOM ZUCCO, Times Staff Writer
St. Petersburg Times–Feb. 29, 2008

Despite a looming budget crisis, Florida House Speaker Marco Rubio said Thursday he’d like to find $250-million to revive a program that offered low-interest loans of up to $25-million to insurance companies.

The first round of loans was crucial, Rubio said, because the money enabled smaller, newer Florida-based companies to step in and help ease the departure of traditional giants such as Allstate, State Farm and Nationwide.

"What will happen eventually is that these small companies show the way to make money in this state at the $200,000 to $300,000 policy level," Rubio said. "Florida can be a competitive insurance market if companies can allocate their risk in the right way. We relied on those big companies too much."

No new funding bill has been introduced, and some believe the small companies are taking only the safest policies, leaving the state to cover the riskiest ones.

Begun by the 2006 Legislature, the Insurance Capital Build-up Incentive Program has used up its $250-million appropriation. Thirteen Florida-based companies, including American Integrity, Florida Peninsula and Royal Palm, took advantage of all or part of the $25-million loans. The companies were required to have matching funds and a clean bill of financial health. There were no restrictions on where the companies would write.

Industry officials say up to 44 percent of the homeowners policies in Florida are written by smaller, Florida-based companies. But state-backed Citizens Property Insurance still remains the primary insurer in the high-risk coastal areas.

Michael Letcher, who runs an Internet site ( that tracks the industry and helps homeowners find insurance, said that while the state has licensed 22 companies to write homeowners policies since 2006, only five write new voluntary business. The rest, Letcher said, either take policies out of Citizens or aren’t finished building infrastructure and agent networks.

Letcher also found that the age of a home and its proximity to the coast present the biggest barriers to finding insurance. The average age of a home whose owner is looking for insurance: 26 years old.

"If we put another $250-million on the table, companies should be required to write some older homes or homes along the coast," Letcher said. "Writing newer homes in the interior of the state is okay, but it won’t solve the problem."