Florida Chief McCarty Calls for ‘Substantive Change’ in Property Market
Jun 25, 2010
The following article was published in Insurance Journal Magazine on June 21, 2010:
By Andrew G. Simpson
Florida Insurance Commissioner Kevin McCarty thinks the time has come for the private insurance industry and public leaders to move beyond debating regulation of insurance rates and “be open and willing to make substantive changes” in the way business is conducted in the Sunshine State.
In a wide-ranging video interview with Insurance Journal, the controversial regulator said it’s time for the state to “stop digging a hole” and to start discussing longer-term issues including land use planning, personal responsibility, state responsibility and how to bring more capital into the state. In the interview, McCarty suggests that the industry and policymakers might want to look at introducing new products such as policies tied to mortgages, or at raising deductibles, which he acknowledges may be difficult on families.
He calls for a fresh look at the distribution of hurricane fund liabilities and the role played by state-backed Citizens. He questions whether Citizens should be insuring high-rise buildings in the construction stages or whether there should be building in erosion zones.
He urges a discussion on the “vulnerability of the housing stock, the increasing exposure in Florida, and how to properly calibrate the attachment point of the state government and its role and personal responsibility:
“There are things that we need to look at, and look at the whole residual market, and say, ‘is it fair, does it make sense that we continue to put large, expensive structures in harm’s way?’ I think we need to look at [things] in a more holistic fashion, and be open and willing to make substantive changes to the way we currently do business in Florida.”
He said the state also must attract new capital.
“We need to look at how we can bring in capital markets to provide greater return. We talk in terms of reinsurance of billions, and in capital markets, you’re talking trillions. How can we tap into some of that, and look at some of the opportunities to do some of those things.”