OPINION: Citizens, consider adding auto insurance

Mar 28, 2008

South-Florida Sun-Sentinel–Mar. 28, 2008
By Samuel Z . Kobran

The conundrum the Florida state legislators find themselves in, as reported in the South Florida Sun-Sentinel, is what extent should they modify the property tax insurance law passed last year. The fear is that Florida’s increased insurance role and exposure is disproportionate to the minuscule rate reduction actually achieved by Florida’s property owners when compared to the legislated reductions.

The actions of the private insurance companies to circumvent the mandated reductions by substituting five-year underwriting experience in lieu of the industry standard of 40 years is a blatant defiance of the intent of state law. Additionally, their action to drop higher risk homeowners from their insurance rolls is indication that their only concern is how to maximize their bottom line. Those dropped only add to the rolls of Citizens, the insurer of last resort, which gets more bloated in good as well as bad years.

It is apparent that Florida has not been successful in raising interest for the formation of a regional catastrophic insurance pool despite a recent increase of severe natural disasters occurring in the southeastern states adjacent to Florida. That doesn’t seem reasonable coupled with the fact the incidence of hurricane strikes in the Carolinas is comparable to those in Florida. I anticipate that so long as those states are treated regionally and not individually for rate-setting purposes, they will go along with their current treatment.

Sans the ability to outlaw single peril, single state insurance affiliates, Citizens should be encouraged to transform itself into a multi-line insurance company with auto insurance the initial add on. The sting of that action would penetrate to the marrow of such companies as State Farm and Allstate. As to feasibility, look to the history of Progressive Car Insurance to demonstrate the practicality of this suggestion. It has grown to challenge all the national auto insurers.

A business practice that could help jump start Citizens into the auto market is to adopt a cross lines sales approach utilized by AARP. Having your home or condo insurance with Citizens would entitle you to a modest discount on your auto insurance premium.

A successful inroad into the auto insurance market would not go unnoticed or unanswered by the biggies. At the very least it would have the salutory effect to diminish their arrogance and smooth the way for their adoption of the intent of future property tax insurance law.

Samuel Z . Kobran is a resident of Boynton Beach.