Florida’s property insurance market making progress
Response to Times editorial
In Print: Wednesday, August 26, 2009
I was disappointed to read the St. Petersburg Times’ editorial on Aug. 14, Florida insurance numbers deceive. The accusations made by the Times were irresponsible.
The editorial alleged that "state lawmakers never heard that fact (the amount of "surplus lines" capital) as they contemplated insurance reforms." This is simply not true. As early as March 24, 2008, deputy insurance commissioner Belinda Miller provided this information to the Florida House Insurance Committee. The insurance office began posting the growth in new capital, including a delineation of surplus lines carriers and insurers, on our Web site in 2007. In addition, I made a presentation to the governor and Cabinet on Jan. 13, 2009, that specifically provided the growth in new capital in the insurance market that did not include the surplus lines companies. As a result this information has been readily available to policymakers, lawmakers and the Times.
The Times’ editorial attempted to produce the "shocking number" of $277 million to minimize the impact of the new insurance companies. This shows a lack of understanding of the issue. Contrary to the fuzzy math used by the Times, new insurers have brought $607 million into the state of Florida; only $97.5 million of that capital was provided by the state’s capital buildup program. None of the $607 million is from monies paid to an insurer for accepting Citizens’ customers as stated by the Times.
The total $607 million in investment capital has enabled new insurers to write 615,959 policies in Florida as of Dec. 31, 2008, which equates to nearly 10 percent of all personal and commercial residential policies written in our admitted market. Without this new capital, these policies would have ended up in Citizens — dramatically increasing its exposure and the risk of assessments to the people of Florida. These significant facts were also omitted by the Times’ editorial.
The importance of surplus lines insurers to the Florida insurance market cannot be underestimated. Following the 2004-2005 storm seasons, despite unregulated rates, surplus lines insurers severely limited their writing of new business at any price. The surplus lines market is critical to our economy because it primarily sells commercial insurance to Florida businesses that cannot find insurance in the traditional marketplace.
The $4.9 billion number used by the Times is important because it illustrates the revitalization of all segments of the property insurance marketplace. It also shows a radical alteration of the current regulatory framework is an unnecessary risk for the people of the state of Florida.
Let me be clear: There are still challenging issues in Florida’s property insurance markets, but to continue to make progress we need an honest debate. It is one thing to disagree; it is quite another to wrongly claim deception. The Times’ negative portrayal and even omission of critical facts about Florida’s property market does not contribute to constructive public discourse on this complex topic.
Kevin McCarty
Florida insurance commissioner