News & Updates


Insurance politics is costing Floridians

By Don Brown

April 2, 2010

Florida is in the grip of a failing insurance regulatory system that’s unjustly taxing residents, jeopardizing their insurance security and intruding upon consumer choices. This is abundantly clear from the alarming number of property insurers that are teetering on insolvency.

A recent Sarasota Herald-Tribune report revealed that “during the 2009 hurricane season, at least 38,000 Florida homes were insured by companies state regulators knew would fail.” The report found “homeowners were not told until after hurricane season, when one company was shut down and the other had to sell.”

Despite the fact we haven’t had a hurricane in nearly five years, the Florida Office of Insurance Regulation has aggressively regulated the property insurance market to the point where once-financially viable companies are now struggling to offer homeowners’ coverage in the state. These big companies are being replaced by small, untested and undercapitalized carriers that state regulators are championing to consumers, with potentially dire consequences.

For example, if your home was destroyed by fire, there’s a good chance some of these untested companies won’t have the reserves to rebuild your home. Sarasota Herald Tribune also found the “average Floridian with a $350,000 house is insured by a company with less than $750 in hand to pay for that home.”

What’s even more disturbing than state regulators hiding failing companies from the public are “hidden hurricane taxes” we’re all paying. If you insure a home, car, boat or business in Florida, you’re paying these taxes. How high can state officials raise your taxes? In 2008, Chief Financial Officer Alex Sink’s office estimated these hidden hurricane taxes can cost the average Floridian family as much as $14,000.

Recently, state regulators have publicly stated that with all the new start-up insurers entering Florida, some will fail, because “that’s how markets work.” But we’re not talking about fast food joints that succumb to free market competition.

We must pass “Consumer Choice” legislation, which protects Florida homeowners from both a failing insurance regulatory system and the next storm. When the state gets hit by another hurricane, the debate will not be about insurance rates, but insurer bankruptcies, insolvencies and homeowners left without protection.

Our state officials have a chance to strike a balance between the price of insurance and the cost of securing a peace of mind that every Floridian deserves.

Don Brown is an independent insurance agent and a former chairman of the Florida House Insurance Committee.

Copyright © 2010, South Florida Sun-Sentinel