Insurance official: Florida is ‘riskiest place to write insurance in the world’
Nov 30, 2007
Bonita News, 11/30/2007
The nonstop coastal building across Florida has pushed the insurance risk in the state to nearly $2 trillion, keeping it the diciest place in the world for insurers, an industry analyst said Thursday.
Gov. Charlie Crist has campaigned furiously to get insurance rates down, but market conditions appear to be working against him. Although losses in the private insurance market have been minimal the last two years in Florida.
Robert Hartwig, president of the New York-based Insurance Information Institute, on Thursday suggests that premiums are not likely to drop despite overall industry profits in the neighborhood of $60 billion in each of the past two years.
The industry had a profit of roughly $3.4 billion in Florida this year, according to Sam Miller, executive vice president of the Florida Insurance Council.
Crist said Thursday it’s “a joke” that insurance companies can’t provide some premium relief to homeowners. “You have to make money during the years there are no hurricanes,” countered FIC’s Miller. In South Miami Beach alone, there are 15 new condo developments going up at an average price of $3.7 million per unit with an aggregate property value of $6 billion alone, Hartwig reported. “Florida is the riskiest place to write insurance in the world today,” Hartwig said. “Despite its hazards, more people continue to move there.” Miller noted that many private companies are staying away from insuring the massive new construction in Florida, which exposes all taxpayers, business owners and drivers to the risk if the state-run Citizens Insurance and catastrophic funds get wiped out.
Earlier this month, state regulators rejected a homeowners’ rate increase sought by four Allstate insurance companies. It is just one of the large national companies reducing their stake in Florida because of the high risk environment.
And, after two largely quiet hurricane seasons, nearly an estimated 90,000 flood insurance policies have lapsed in Florida, creating another worrisome scenario.
That represents nearly a third of the flood policies issued in Florida since July 2005, compared to the national average of 8.6 percent. “Vigilance seems to be slipping already,” Hartwig said. “What happens in Florida resonates around the world.” He said the statewide liability is projected to increase to $4 trillion by 2014 and that a repeat of the Miami hurricane of 1926 would produce an insured loss in the $80 billion range. That storm, a Category 4, killed 243 people in what was then a far smaller Miami.