Musical Chairs with Insurance
|Hurricane Charley August 2004|
State Farm's announcement to stop insuring property in Florida sent shock waves through the state. That decision will take two years to implement, but the impact is already being felt by some.
Michael Letcher is president Home Insurance Buyers Guide LLC. The company provides consumers online details on available property insurance companies.
He developed the web site and service after his own home insurance was cancelled a few years back and he couldn't find information on alternative companies.
Letcher says when State Farm announced plans to cancel all property insurance policies in Florida, the number of visits to his web site jumped from 500 to 2,000 a day.
"Floridians have been through this so many times that they do not want to wait around for the 90 regulatory review," Letcher says. But the question remains if the 30 or so companies still writing property insurance policies in Florida can absorb the 1.2 million State Farm customers.
He says state farm pulling out has set off a game of musical chairs. And like the game, there may not be enough insurers to go around and those companies can pick and choose.
That could result in the older homes and those on the coast with more risk being insured by state-run Citizens. And he says that leaves all Floridians responsible and more at risk, financially.
Letcher believes one solution is to offer private companies incentives like higher rates to take on more risky policies.
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