The Tale Of Two Governors And Florida Property Insurance

Aug 4, 2014

The following article was published in the blog:

By Nathan Buehler 

The upcoming mid-term elections bring a wave of uncertainty and a pivotal juncture for Florida property and casualty insurance companies, Nathan Buehler writes in the blog. 

Political views and emotions don’t belong in your investing portfolio. Political outcomes do.

One candidate is the better choice for your investments.

We have two candidates with opposing viewpoints on the insurance industry.

Before we get into our discussion, let me be clear. We aren’t here to discuss politics. This is one small part of each candidate’s platform and you can discuss the rest of their views somewhere else. Political views and emotions don’t belong in your investing portfolio. The outcome of politics do.

Florida’s Hurricane History

In 1992 Hurricane Andrew was a big wake-up call for Florida property insurance companies. Previously rates in Florida had been on-par with the rest of the country, leaving property insurance companies underfunded and unprepared for their massive claims. This case study gives a good historical background of this time period.

During 2004 and 2005, Florida faced an onslaught of hurricanes. Even though citing Wikipedia is frowned upon, they have a great breakdown of the storms and damage totals for those years here.

The storms of 2004 and 2005 only exacerbated the Florida property insurance market problems. Companies such as Allstate Corp (NYSE:ALL) wanted to drop all of its Florida home insurance policies. State Farm followed suit threatening the same several years later.

Regional carriers emerged as Floridian’s go-to insurers. The state created Citizens Property Insurance Corporation and it quickly ballooned to the state’s largest insurer. The fact that the insurer of last resort became the number one property insurance company in the state tells you a little bit about the marketplace.

Florida Today

State Farm announced plans to begin writing new policies in low risk areas of the state. Citizens Property Insurance Corporation has reduced its policy count from over 1.5 Million policies to 933,422 policies today.

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