Posted On: February 22, 2008, 7:13 am CST

Posted By: Ratemaker

Wait, I was under the impression that Florida's Excess Profits law only applied to Work Comp and Private Passenger Auto Liability. I used to do the filings for my company and those were the only lines I ever had to do.

The Excess Profit law isn't "new" crap from Tallahassee, but it is crap. The justification is that since the state mandates the coverage, those providing it shouldn't reap too great a profit from it, given the guaranteed market.

If I remember correctly, the EP law refers to an underwriting profit only. These two lines are pretty long-tailed, so it actually wouldn't be all that uncommon for a carrier to operate at an underwriting loss, and still be profitable on the investment income on the reserves.

However, laws like this stifle competition, which is far more effective than regulatory nonsense in preventing an excessive profit. The work comp law is doubly bogus because carriers have to use the State/NCCI loss costs.

Note to Florida regulators:
PRICE GOUGING CANNOT EXIST IN A MARKET WITH HEALTHY COMPETITION!