News & Updates


Insurance industry warns of tenuous financial state

By Stephen D. Price
Florida Capital Bureau 

Florida property owners may have to brace for more than just high winds this coming hurricane season.

Insurance advocates warn that the state lacks the financial backing to withstand a hurricane the size of Katrina hitting Florida, and that could result in nonpayment of claims.

"In our state government’s pursuit of artificially low rates Florida has in essence created a fragile system of insurance that leaves Florida homeowners and tax payers at great financial risk," said Jeff Grady, president of Florida Association of Insurance Agents, in a press conference Thursday.

Gov. Charlie Crist has championed lower insurance rates and vilified big insurance. State regulators denied State Farm Florida an average 47-percent rate increase, and the company is pulling out of the Florida property-insurance market.

Grady said about 40 percent of insurance carriers in Florida posted a net loss in 2008, a year without a hurricane landfall in the state.

"This is an indication to us that artificially suppressed rates are keeping some of these companies from being able to price the wind risk adequately," Grady said.

Some were lukewarm to a bill that passed the recent legislative session that attempts to deregulate property insurance in Florida.

The bill (SB 2036) authorizes certain insurance carriers to use a rate in excess of applicable filed rate.

"It deregulates a few select insurance companies who may qualify but it does so at the expense of other carriers who don’t," said Scott Johnson, vice president of FAIA. "The ones it does deregulate are the largest."

Walter Dartland, executive director of the Consumer Federation of the Southeast, said consumers face a serious dilemma.

"Either pay now, or pay later," Dartland said. "We just can’t afford as consumers to turn our backs on the market. … Paying more for insurance now is probably better than having worthless or no insurance at all."