OPINION: Straight talk on property coverage

Feb 21, 2008

Bradenton Herald--Feb. 21, 2008

Headlines and reports of government leaders and oversight agencies battling the insurance industry, insurance companies on trial for alleged conspiracy and withholding documents, allegations of massive profits by private companies and profiteering on the backs of Floridians – what the heck is really going on? Well, here’s some straight talk on property insurance in Florida.

The truth is that there are a number of insurance companies who are aggressively competing for homeowners and condominium-dwellers policies, and insurance premiums for homeowners on average have declined approximately 15 percent since last year. Yet, there are companies filing for rate increases and canceling policies, and others are withdrawing from this state entirely. While there are many reasons for the rapidly changing dynamics in Florida, some significant reasons for such are as follows:

• Market participants – Domestic insurers (those domiciled in Florida and primarily only writing in Florida) rather than national insurers, are the ones aggressively competing for new business. National companies who have options to do business in more friendly and less risky states have been choosing to reduce their exposure to Florida or leave altogether.

• Risk and profits – Totaling nearly $2 trillion, Florida has more coastal building exposure than any other state in the country and storm-cycle projections call for above-average hurricane activity for the next 15-20 years. While Florida insurers made some nice profits due to no storm claims the last two years, the fact is the entire profit of the insurance industry for Florida property insurance is actually a net loss of $6 billion since 1992.

• Citizens Property Insurance Corp., the state-run insurer, now actively competes with private industry and this negatively affects private insurance companies and their interest in doing business in Florida. With regard to profit and risk, Citizens made about $2 billion in profit last year, yet their current exposure is approximately a half-trillion dollars, for which they collect about $4 billion a year in premiums.

The straight talk is that, until we get government back to the basics of oversight and governance with regard to focusing on insurer solvency, fair-trade practices and promoting and attracting capital – and away from the political demagoguery and demonization of the industry, political rate-setting, unfair government competition and free-market interference – we are not going to achieve a healthy and competitive insurance market in Florida.

John C. Laurie is a vice president and the agency manager of BB&T-Wyman Green & Blalock, a division of BB&T Insurance Services Inc., with local offices in Bradenton and Lakewood Ranch. He can be reached at 748-1431, ext. 1206.


John C. Laurie x jlaurie@BBandT.com