Property Insurers Still Pulling Out of Florida
Some property insurers want to pull business out of the state. Now, that might not seem that unusual, but pullouts were basically supposed to stop with recent reforms.
You see, the legislature met in January, decided to change policy, with the hopes of luring - and sometimes cajoling - new companies into the market. The idea being the greater number of insurers, the less risk any one company would have to absorb. But a couple weeks into it, that plan for market diversity appears to be backfiring in a spectacular fashion well here, listen for yourself:
READER: Dear Florida agent, We are very concerned with the new law that was passed in the special session, and signed by the Governor... Florida residents are now exposed even more... effective immediately, Auto Owners Insurance will accept no new business...
HARTFORD: The Hartford has made the very difficult decision to discontinue writing and renewing certain Florida property business - both personal and commercial - through the agency channel.
TOWER HILL: To be able to manage our capacity and exposure concerns resulting from the EO, it is necessary for us to close all lines of business - both with wind and excluding wind coverage - in 16 coastal counties. Accordingly, effective February 1, 2007 all lines in all Tower Hill companies are closed for new business in all coastal counties south of - and including - Pasco to Brevard. Existing quotes will be honored for as long as possible.
At least four property insurers-Travelers, Auto Owners, Vanguard and the Hartford will not write new property policies in the state. Vanguard is a special case. That company is under state control because as a private company it couldn't meet it's obligations. And then a fifth company, Tower Hill, is cutting back drastically, including here in the Bay area.
These five companies cover about eight percent of property in the state. To put it another way, the companies combined would be the third-largest insurer. All these companies were contacted by WUSF for comment, and either didn't return calls or refused to comment.
But Chief Financial Officer Alex Sink says when she talks to the company officials;' they all give one reason why they are pulling back business.
SINK: Well they're saying because there's so much government intervention in the private marketplace, they can't predict where the market will be from one day to the next.
That's Chief Financial Officer Alex Sink. The newly-elected Democrat oversees insurance regulation.
SINK: They don't like operating in an environment of such uncertainty and turmoil.
There are other examples of massive non-renewals. State Farm planned to drop about 40,000 policies, before the state stepped in with the emergency rule. And according to the office of insurance regulation, Allstate plans to drop 106,000 customers, or about a quarter of its policies.
Some internal state estimates show state-run insurer of last resort, Citizens Property Insurance, growing by about 7 percent in the next year as companies withdraw from the market.
Meanwhile, most state elected officials maintain the new laws will bring more companies into the market. And that, they say, will help cut rates long term. That stance is in stark opposition to how the insurance industry sees it.
LETTER: We cannot continue doing business as usual in Florida without changes to current law.
That letter from Auto Owners goes on to say the group will work with industry lobbyists to work 'towards a solution which is in everyone's best interest.'
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