Saying Goodbye to 2011
December 31 marks the end of another calendar year, and with that we close the books on another active year in the Florida insurance market. Florida’s diverse population, large base of potential policyholders and unique political and market issues tend to mean that insurance-related topics are prevalent in each year’s headlines.
We began this year in the residential property market trying to figure out what to do about a sinkhole insurance problem that was producing massive losses to Citizens Property Insurance Corporation and was hurting some admitted market insurers. After legislative analysis and a data call, we could identify the problem but knowing what to do about it was another story. The debate was intense, and ultimately the legislature passed some reforms in SB 408. Attention then turned to Citizens’ rate filing and whether it properly took into account anticipated (hoped for?) loss reductions arising from the law change. I don’t want to be too pessimistic on an eve of celebration, but I think we’ll find that Citizens still isn’t collecting nearly enough for its sinkhole losses, and the new law doesn’t do enough to warrant insurers’ exposing their capital in sinkhole-prone areas.
Other high-profile topics received attention but did not result in new legislation. Among these were efforts to amend Florida’s bad faith laws and to alleviate concerns with Personal Injury Protection insurance. As with many hot insurance topics in Florida, the absence of reform in 2011 simply means the issues will roll forward to the next year. Similar to the sinkhole debate, interested parties have devoted a lot of attention to the PIP issue. Unfortunately, it is easier to identify the problem than to craft a solution that will withstand attack from the various constituencies.
Meanwhile, Florida continued to pursue waivers of the medical loss ratio requirement in the health insurance law, and the absence of a waiver creates questions about how the Florida health insurance market will be affected.
Late 2011 also brought confirmation that Insurance Commissioner Kevin McCarty indeed will become the NAIC’s next president. We wish Commissioner McCarty well as he balances the many issues uniquely affecting the Florida insurance market with the national issues at the NAIC level.
Governor Rick Scott also upped the ante this fall when he challenged Citizens Property Insurance Corporation to find ways to privatize itself. First, however, we’ll need to figure out how to stem the tide because Citizens’ policy count is increasing significantly. Reducing the size of Citizens goes hand in hand with creating a market in which private insurers can, and want to, do business. If we don’t have both elements, there won’t be anywhere for the Citizens policyholders to do.
The Florida market has its unique considerations whether we’re talking about property insurance, auto insurance, health insurance, workers’ compensation or any other line of business. As we tear off the last page of this year’s calendar, we hope that all of our clients and friends have an opportunity to step back, relax and unwind because one thing is certain….. we’ll do it all again in 2012, and soon too with the legislative session starting in January!
Happy New Year!