Florida Trend: Insurance 2008

By Mike Vogel – 1/1/2008

Chasing opportunity, several companies last year took 225,000 policies off the hands of Florida’s state-subsidized insurer, Citizens Property Insurance. Meanwhile, Hollywood-based property management company Continental Group launched a self-insurance fund offering property coverage to the 900 buildings it manages.

Both, though, are relatively small developments in the scale of Florida’s insurance woes. Owners of homes, autos and businesses in Florida remain on the hook for billions in losses if a hurricane hammers Citizens and the Florida hurricane catastrophe fund that backs up Citizens and private carriers. The 225,000 takeouts only slowed the rate of Citizens’ growth. Citizens, the state’s largest insurer, ended the year with 1.4 million policies, well below the 1.7 million to 1.8 million forecast earlier in 2007. Citizens, by law, can’t begin to charge actuarially sound rates until at least 2009.

Representatives of private insurers continue to be dazed by the public thrashing they’ve gotten from Gov. Charlie Crist, their abandonment by a presumably friendly Republican Legislature and, with a few exceptions, by other industries. “I’ve been surprised by the lack of support. It may be industries being concerned about being the next target of our activist governor,” says William Stander, assistant vice president and regional manager for the Property Casualty Insurers Association of America in Tallahassee. Says Sam Miller, executive vice president of the Florida Insurance Council, of the industry’s view of the state: “I think folks outside Florida, the bigger companies anyway, are astounded at the war going on down here.”

This month, Stander’s group will unveil proposals to the Legislature to rate homes so that buyers know their hurricane risk, expand government programs to harden homes and offer low-interest loans to cover larger deductibles to encourage homeowners to take the risk of upping deductibles. While some propose having the state take over all wind coverage [“Re-reforming Insurance,” November, FloridaTrend.com], others instead suggest an opposite approach: Have the state test unregulated rates in the commercial property market to see if it leads to more competition and lower rates.

The new companies taking business, meanwhile, concern some. “I think it’s great we’re seeing so many companies come in, but I’m a little concerned about how they’re capitalized,” says the state’s insurance consumer advocate, Bob Milligan. “They’re thinly capitalized no matter how you slice it.”

Slow to Retrofit
The state’s My Safe Florida Home program has spent or set aside $144 million of the $250 million the Legislature gave it through June 2009 to assist homeowners with fortification. As of November, 125,021 homes had been inspected under the program. A partial breakdown:

$63.6 million set aside for 12,710 homes whose hardening is in progress
$15.3 million for wind inspections
$22.5 million for Tallahassee Community College’s mobile home mitigation program
$7.9 million to harden 2,481 homes
$6.3 million to local governments to serve low-income homeowners (1,247 identified for hardening, 73 hardened)
$9.3 million to Volunteer Florida to serve low-income homeowners (4,704 enrolled and 1,111 homes hardened)
$3.1 million for technology and training
$1.2 million in administrative costs
$1 million projected for outreach and education
$1 million for the Department of Community Affairs’ Low-Income Emergency Home Repair program
The Year Ahead

Title Insurance
Insurance consumer advocate Bob Milligan wants the state to look into title insurance and what benefits consumers get for their premiums.

PIP
Insurers will see how the restoration of personal injury protection plays out. Large insurers wanted PIP to sunset, but the Legislature sided with the small insurers, healthcare insurers and hospitals that wanted it kept alive. “It’s one of the most divisive issues in the history of the association,” says Sam Miller of the Florida Insurance Council.

Health Insurance
The Legislature will take up recommendations from the state Health Insurance Advisory Board, which has ideas for marketplace changes and government intervention to get more Floridians covered. Healthcare insurers are showing lower loss ratios. The Census reports that one-quarter of Floridians under 65 lack healthcare insurance.
 

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