A recent phone call with one of my Naples clients prompted me to think about the coming storm for property owners in the Sunshine State.  Like a natural hurricane, it looks like nothing man made will stop what is already in motion.

My client, who has family and business connections in Virginia with deep roots and a lot of successful years in the insurance industry, relayed the following information to me.  It seems amongst the insurance agency circles, there is a lot of jockeying to secure a franchise to sell property insurance in Florida from some of the behemoth insurance carriers.  The word is out that the “big boys” will be coming back to the Florida property insurance market. Yes, you heard that right.  They are preparing to come back!

No surprises here, as there has been a push for some time to get the insurance rates up to a level that will attract more insurers back to the Florida market.  That’s been the game plan for some time given the push to depopulate the rate handicapped Citizens Insurance Corporation.  But what is this?  The St Petersburg Times reported on September 14, 2013 that Security First Insurance Company, who reportedly has 100,000 insured policyholders, has asked the Florida OIR to allow for a RATE REDUCTION of 9.3%.  So what’s up with this?  How are companies going to be enticed back to Florida with rate reductions?

So the question now is what do you believe?  Are rates going to fall and companies will come back, or is this some kind of faint by a very business savvy underwriting department to capture market share before the “big boys” jump in? My bet is the rates will be going a lot higher and I think this Virginia agent has tipped the industry hand.  I think the insiders are already lining up to cash in on the rising insurance market on the backs of all Floridians. If you want to hear a firsthand accounting of how insurance companies game the system on rate increases, listen to some of the commentary in the “Homeowners Policy & Claims Bill of Rights Working Group” session that was held around the State. Note there are three sessions, but all of them will provide you with great background as well as current information on the many issues in the Florida property insurance market.  You may be shocked at some of the things these folks talk about. 

Now back to those rate increases.  Recently some folks in the legislature came down hard on the Citizens scheme, which has included for some time a 10% per year cap on rate increases.  By keeping rates low, folks flocked to Citizens and its underwriting portfolio exploded.  This increase in policyholders was grabbed on to by certain legislators and their lobbyists and became the mantra for depopulating Citizens because in the event of a major hurricane, every policyholder would be assessed to cover any catastrophic shortfall.  For some of these legislators the solution was simple, get the private market back to Florida and the problem would go away.

In my opinion, this is a slight of hand. What happens to the Citizens new takeout companies (some of them pup companies of the “big boys,” and others are brand new startups with barebones capitalization) if they fail? Guess what--same result.  We will all pay through the Florida Insurance Guarantee Fund who has the same ability to assess and collect shortfalls in claim payments if capital reserves and banked premiums run out, just as Citizens now has.

So what we may have here is a big shell game to justify significant rate increases that I believe are coming. Nothing has changed.  Florida is still in harms way while the political types have come up with a scheme to support massive rate increases. Now in the interest of fairness, they claim insurance rates will fall given new competition. Do you believe that?  I don’t.  The industry lobbyists simply overwhelm any and all consumer groups.  Retirees, you and me, do not stand a chance against an industry who at one time was referred to by one financial author as the “invisible bankers.”

Finally, while the Consumer Bill of Rights folks are holding meetings, one State Senator, a member of last session’s Senate and Banking Insurance committee, and a big supporter of killing Citizens and letting rates rise, reportedly said all public adjusters and lawyers are slime balls. When asked about the Consumer Bill of Rights Committee, he said he had never heard of it. How can you be on a committee that makes laws and be unaware of a group of insurance types including state employees and not know about the proposed Consumer Bill of Rights workshops? As an aside, why has it taken at least 40 years (the length of my insurance career) to formulate a consumer bill of rights platform? Were there no consumer rights before?

Also how does it make you feel to know that the folks who are making the laws and pushing agendas for the insurance industry are that uneducated and ignorant?

Folks, we as Floridians need to wake up before it’s too late. With the coming storm of flood insurance premium increases and now the unfretted rate increases on property insurance, the property market in Florida along with the economy could be severely impacted. But then maybe I am all-wrong.  Lower premiums will draw the “big boys” back.  If you believe that, I would like to talk with you about a bridge for sale in Brooklyn, New York. Educate yourself and beware.

If you have questions regarding any property insurance claim related issues please call 800.321.4488 or contact us to submit a question to one of our public adjuster or insurance claim experts.