Florida insurance leaders belive that recently passed legislation (SB2044) is a step towards stabilizing the state’s property insurance market that has had been rocked by politics, premiums assessments, company failures, reopened hurricane claims and a credit mitigation program that got out of hand.
At the same time, they warn that the legislation that they all hope Gov. Charlie Crist will sign will not solve all of the market’s problems and it will not mean big savings for consumers.
In a new exclusive video, Insurance Journal’s Andy Simpson interviews Jeff Grady, president/CEO, Florida Association of Insurance Agents; Kevin McCarty, insurance commissioner; James Graganella, president/CEO, Southern Fidelity and Capitol Preferred; and Jay Newman, chairman, one-year old Sawgrass Mutual on SB2044 and on what the Florida market might look like a year from now.
The bill under consideration by Crist, SB2044, addresses a number of costs in the system. It reduces the time a homeowner has to file a claim after a hurricane from three to five years and more closely regulates public adjusters, some of whom are blamed for an explosion of reopened claims from Hurricane Wilma five years ago. It allows an insurance company to withhold a portion of payment on a replacement cost claim to make sure that the money is being used to actually repair the property. It raises surplus requirements for carriers. It also streamlines the process for insurers to get state approval for reinsurance costs in rates and tries to bring premium credits for mitigation efforts under control.
Insurance agents believe the most important thing the bill does is give carriers a chance to get back on firmer financial footing so they are better able to pay claims in the future.
“This bill is meant to help restore solvency. I’m not suggesting that it does because just as it took a while to get to this point, it is going to take a while to get out of it, and let’s keep our fingers crossed that there is no storms. But… there are some things in there that I think do good things for the companies, maybe do some good things for agents, but more importantly do great things for consumers which try to make sure that carriers can deliver on their promise,” says Jeff Grady, president, Florida Association of Insurance Agents.
While all hope that the bill will help stabilize the market, consumers should not get their hopes up for huge premium savings, according to Insurance Commissioner Kevin McCarty.
“It’s always dangerous to speculate about future rates. We will say, though, that the trajectory was for a very negative impact on companies. And what we’re seeing hopefully is that the combination of the attributes of this bill will stabilize the market. At this point, we would be happy just stabilizing the market. I anticipate that there will be cost increases that are associated with doing insurance business in Florida, but we’re hoping to see it return to profitability in the next fiscal year,” he tells Insurance Journal in the interview in Tallahassee.
From the carriers’ perspective, SB2044 represents a good first step toward a stronger market that will benefit them and consumers.
“It’s not a game changer. It doesn’t solve all the problems but it’s a step forward just like the bill last year was a step forward,” says Jay Newman, chairman, Sawgrass Mutual.
James Graganella, president and CEO, Southern Fidelity and Capitol Preferred, agrees.
“I think it’s a step in the right direction. I think this is a bill that’s very consumer friendly in the long haul,” he said.
In the video interview, the leaders also address how they hope the Florida marketplace looks a year from now assuming Crist signs SB2044.
“No hurricanes – that’s what I would hope for over the next six months – and that some of these good measures that were really a restoration of what we have lost are starting to have a positive impact on these carriers. They find their foundation and they start to grow surplus rather than lose it. And we are not having all this churning of business that is going on now; that we have some stability in the marketplace that agents feel comfortable in advising consumers to go with that company. That would be a much better day than where we are now,” says FAIA’s Grady.
Was this article valuable?
Here are more articles you may enjoy.