You must be an office girl for some captive agent. You have no idea about a free market or what it means to have the market provide solutions. I hope you enjoy your Obamacare. The feds can’t even handle flood insurance!
1. Start a company with borrowed 5 million.
2. Create a MGA to administer (Ha) the company.
3 Charge 65% of the premiums for doing so.
4. Put together some bulls*it reinsurance
5. Give the keys to FIGA when the wind blows.
6. Let all the citizens and good carriers,if any are left to pay for your loses through FIGA assessments.
7. Pay off the 5 million loan and pocket the rest through your MGA.
Hello, How many more Florida based carriers have to go broke even before the wind blows until we figure this out?
Agree! This is such a joke. Does Charlie Crist own a home in Fla. Because I do and I am one of the unfortunate ones being nonrenewed by State Farm with nowhere to go but Citizens due to the construction of my home. I am also an independent agent and have a lot of my customers being ‘risk metered’ from good companies only to have to pay the next company twice as much for a lot less coverage and no idea if these people can pay the claim or not.
That may well and has proved to be your plan – PONZI that is. However, I believe if you spend some time reviewing the financials of all of the Florida domestics it is apparent that some of them are posting underwriting gains and building surplus in preparation for when the wind does blow and it will. Some of the companies will undoubtedly fail, others, those with disciplined underwriting skills, and prudent management will survive.
Bubba, let a another major storm come through here and we will see which of the domestics are still standing. I think you’d be surprised irregardless of underwriting gains.
1. Got a problem with credit? If banks or other institutions will provide the debt at attractive terms then why do you blame the carriers for borrowing it? FYI – while some of the bad apples were / are highly leveraged, most of the FL carriers have substantial equity capital (i.e., true skin in the game).
2. Most of the FL domestics’ MGAs have infrastructure and are providing value to the carriers.
3. Where do you come up with 65%? (let me guess a news article) Most MGA’s charge the insurer around 25% of premium.
4. Most FL domestics are purchasing responsible reinsurance programs. If the regulators and politicians allowed adequate primary rates in FL then I’m sure many of them would purchase more reinsurance in the near term(and less over time as they built adequate surplus).
5. Apparently you haven’t noticed that the wind hasn’t blown lately. Still, several companies have gone insolvent and may result in FIGA assessments. Might this clue you in that market conditions being imposed by regulators / politicians are creating a bad business environment.
6. Yep, that’s what’s gonna happen if public policy doesn’t change. However, the biggest assessments will come from Citizens Prop Ins Corp (because they charge inadequate rates, don’t buy reinsurance, etc.) and the FHCF…not from private carrier failures.
7. If people are going to provide capital to underwrite insurance in the most hurricane prone / risky area in the world, then they have to make an adequate return. Why do you think State Farm, Allstate, etc. have been reducing their exposures in FL.
8. Get educated before you start slamming entrepreneurs who are trying to provide a valuable service to FL’s citizens (and yes, make some money in the process…..I know that’s an evil thought in Obama world here lately).
Everyone talks about ‘when the wind blows.’ Most carriers’ liability is limited greatly by their reinsurance treaties. One carrier I spoke with has a $600,000 exposure for a hurricane. Reinsurance picks up the rest.
As long as the reinsurers are healthy and can handle the claims, I don’t think hurricanes will kill the admitted carriers.
Sinkhole losses are the enemy right now. Not canes.
Doesn’t matter. Crist won’t listen. Instead, he will turn this on those CEOs and make them out to be the bad guys – because it helps him politically. That’s the only thing that matters to Crist.
While these CEOs may be absolutley right, Crist will find a way to use this to promote himself as “defender of the little peoples,” even though he knows we’re one storm away from bankruptcy. After all, he needs votes.
MGA’s are started to be regulated because it is such a scam right now with these Florida domiciled carriers, Bernie Maddoff was right in his discription of what is going on here. All of the money sent in to these carriers is being siphoned off to the MGA’s and when they are insolvent the owners of the MGA’s who are also the officers of the carrier, steal the money and ride off into the sunset. That is what is going on, see the following article.
Florida’s Southern Oak Agrees to Reduce MGA Fee, Wind Exposure
March 18, 2010
A Jacksonville property insurance company is back in the good graces of regulators.
Insurance Commissioner Kevin McCarty signed off on an agreement with the Southern Oak Insurance Co. after the insurer agreed to make some changes to its business plan.
Southern Oak, which insures 64,000 Florida homeowners, will stop writing policies in the high risk South Florida counties of Broward, Miami-Dade and Palm Beach until it reduces its wind risk in that region to less than 30 percent of its total exposure. Regulators had also told the company it was paying its managing general agency too much and the insurer has agreed to reduce the amount of cash it is sending to its management company.
Regulators warned Southern Oak last week that it had to be in compliance with regulatory safeguards or be at risk of losing its license.
The issue of Florida insurers diverting profits into management and reinsurance companies they own was the subject of a recent Sarasota HeraldTribune special report.
All of these companies are a Fraud on the citizens of Florida and should not be allowed to operate here.
You are obviously a pig who has problems with women. I do work in an independent agency and work exclusively in personal lines. I am very worried that after a storm our clients will be waiting for months to collect their claims. Not to mention the fact that th 2% to 5% wind deductibles will not be able to be paid by our insureds. Oh and Replacement cost is only provided on a reimbursement basis, so your client must replace the items before the policy will pay your claims. You know that these Florida carriers will not act like the National carriers and go ahead and pay those claims at a replacement cost basis right off the bat. We see every week the Florida Domestic market losing another carrier even before any cat claims. I am just very happy I am not a client of yours.
MR SOLVENT!!! WHAT A JOKE!.
YOUR NEW NAME IS MR. INSOLVENCY!
State Farm of Florida is not in any better shape financially than most of my carriers. Talk about hard headed- why did they create a separate operation for Florida? So the mother ship could not be sunk by a major Florida Hurricane Catastrophe and reduce their exposure within the Cat Fund. Now the real solution to all of these problems- DEREGULATION OF RATES. If ole Charlie was the problem solver that he portrays himself to be- he would have the balls to push for passage and then sign HB447, SB876 and SB2044. I doubt he has time to worry about such legislation- might interrupt his afternoon tea with the teachers unions.
Agents association should push for allowing national carriers to charge what ever they want for Homeowners coverage. We should also push to add windstorm as an option and a earthquake opion to the National Flood policy program, which would solve the problems we had after Katrina for dual causation. Wind and water. Problem being Kansas does not really want to pay for our windstorm thats why it has to be optional for each insured to choose. This would allow the large national carriers back into the marketplace. NO I do not work for SF or Nationwide, This would be what is best for the consumer of insurance in Florida. Yes you will pay more but, you will actually get your claims paid after a hurricane.
Plus, if wind coverage goes to a national program, independent agents will suffer because the State Farm’s of the world will jump back into the property market much faster than the Travelers and Hartfords. That solution would be a death knell for many independents.
Sorry you dont like my solution. I didnt hear one from you though.
NFIP has filled a major need in providing flood insurance when carriers would not fill the need for coverage. They do a tremendous job in establishing rules and rates and flood maps to develop rates and zones. Sorry you dont have any confidence in something that has actually been a success. By the way I get 20% commission on my flood business and I do it through a write your own carrier, Auto Owners Insurance Company A++ with 6 billion in surplus who would love to write homeowners in Florida but cannot because of the catastrophe risk to the entire company because of the peril of wind in Florida. They would be here just as fast as State Farm and Nationwide.
After reading your post, it is obvious that you do not really care about your clients need to be covered by a quality carrier but your commission in your main thought when dealing with your clients.
I am just glad your not my agent.
Sarah,
The NFIP is nearly $19 Billion in debt to you and I, the taxpayers. They will never pay this back. We will eat it!. As far as Citizens is concerned, you think they will be any more responsible in paying their claims in a timely matter? If they were a real insurance company, they too would be deemed insolvent. As far as the domestics are concerned, as more carriers that spread the risk and compete will reduce the amount of premium and stabilize rates in the short term. There will always be bad businesses that are run by greedy morons (see Lehman Bros, AIG, GM, etc.) Kevin Mc Carty needs to stop talking out of both sides of his mouth and do what his office is suppose to do, oversee the industry. Greedy PA’s and sinkhole attorneys are a bigger problem than a few mismanaged MGA’s. The government has no business being in business, cause when they run a business into the ground they don’t go bankrupt, they just suck it out of you and I and continue making bad business decisions.
The State of Florida cannot print money. We will eat a whole lot more if the windstorm issue is not transfered to a federal government program. The State of florida’s economy is too small to handle the aftermath of a catastrophe.
Forget stabalizing rates, you should be conerned about what happens after a storm. Actuarily the rates being charged now are about 40% too low.
The mismanaged MGA’s you talk about are owned by the carriers who funnel money through them. This is why the DOI is coming down on them for stealing the premiums from the carriers and leaving the policyholders vulnerable to insolvency.
I agree that the Government has no business being in business but only when the private market is not providing a market. This is why we have established the NFIP and why we need to transfer wind coverage there as well, due to the fact that large national carriers who are the only insurance provides who could provide the financial security we need to write this very important and significant exposure, will not do so. You can not blame them for not allowing a few states risk the financial future of their entire billion dollar enterprise. That is just good business and risk mangagement on behalf of their shareholders and policyholders in other states. This exposure needs to be transfered to the Federal Government and administered by the homeowners carriers who write the rest of the risk.
Since when is the NFIP managed well , the are $19 Billion ( yes billion) in debt to the U.S. Treasury for subsidizing 25% of thier risk pool with inadequate rates. You must be a Socialist who does not believe in a free market economy. ( History Lesson- See the U.S.S.R. this did not work, and the Chinese figured it out before they went belly up) No further dicussion necessary. By the way, in case you hadn’t noticed the Federal Government is running out of money too. Our Populist governor should allow the rate increase and cease letting Citizens compete against the market place.
More competition will lead to lower pricing, more innovation and greater risk distribution.
Sarah, if the private market is allowed to charge the appropriate rate commensurate with the risk then there would be no need for the government to step in. I don’t understand how someone like yourself, working in a private business / agency, can be so anti free market. Have you stopped to think about the ramifications of shifting what should be a private market solution to the government? The result would be continued rate supression by politicians, higher taxes to cover the resulting deficits, more irresponsible development along the coast line (so the gov. can collect more property taxes), etc. Please spend some time thinking about this and don’t fall into the “dependency” trap. I like your comment about freedom of rate for the larger carriers, but that should also apply to the smaller carriers. Yes, there have been some bad apples who have abused the MGA system, but that doesn’t justify the government taking over the business of insuring hurricanes in FL….what a disaster that would be. I hope you spend some time really thinking this through instead of getting emotional / defensive.
Sarah,
You must be an office girl for some captive agent. You have no idea about a free market or what it means to have the market provide solutions. I hope you enjoy your Obamacare. The feds can’t even handle flood insurance!
These start up carriers are a PONZI!
1. Start a company with borrowed 5 million.
2. Create a MGA to administer (Ha) the company.
3 Charge 65% of the premiums for doing so.
4. Put together some bulls*it reinsurance
5. Give the keys to FIGA when the wind blows.
6. Let all the citizens and good carriers,if any are left to pay for your loses through FIGA assessments.
7. Pay off the 5 million loan and pocket the rest through your MGA.
Hello, How many more Florida based carriers have to go broke even before the wind blows until we figure this out?
Agree! This is such a joke. Does Charlie Crist own a home in Fla. Because I do and I am one of the unfortunate ones being nonrenewed by State Farm with nowhere to go but Citizens due to the construction of my home. I am also an independent agent and have a lot of my customers being ‘risk metered’ from good companies only to have to pay the next company twice as much for a lot less coverage and no idea if these people can pay the claim or not.
Bernie:
That may well and has proved to be your plan – PONZI that is. However, I believe if you spend some time reviewing the financials of all of the Florida domestics it is apparent that some of them are posting underwriting gains and building surplus in preparation for when the wind does blow and it will. Some of the companies will undoubtedly fail, others, those with disciplined underwriting skills, and prudent management will survive.
Bubba, let a another major storm come through here and we will see which of the domestics are still standing. I think you’d be surprised irregardless of underwriting gains.
1. Got a problem with credit? If banks or other institutions will provide the debt at attractive terms then why do you blame the carriers for borrowing it? FYI – while some of the bad apples were / are highly leveraged, most of the FL carriers have substantial equity capital (i.e., true skin in the game).
2. Most of the FL domestics’ MGAs have infrastructure and are providing value to the carriers.
3. Where do you come up with 65%? (let me guess a news article) Most MGA’s charge the insurer around 25% of premium.
4. Most FL domestics are purchasing responsible reinsurance programs. If the regulators and politicians allowed adequate primary rates in FL then I’m sure many of them would purchase more reinsurance in the near term(and less over time as they built adequate surplus).
5. Apparently you haven’t noticed that the wind hasn’t blown lately. Still, several companies have gone insolvent and may result in FIGA assessments. Might this clue you in that market conditions being imposed by regulators / politicians are creating a bad business environment.
6. Yep, that’s what’s gonna happen if public policy doesn’t change. However, the biggest assessments will come from Citizens Prop Ins Corp (because they charge inadequate rates, don’t buy reinsurance, etc.) and the FHCF…not from private carrier failures.
7. If people are going to provide capital to underwrite insurance in the most hurricane prone / risky area in the world, then they have to make an adequate return. Why do you think State Farm, Allstate, etc. have been reducing their exposures in FL.
8. Get educated before you start slamming entrepreneurs who are trying to provide a valuable service to FL’s citizens (and yes, make some money in the process…..I know that’s an evil thought in Obama world here lately).
Everyone talks about ‘when the wind blows.’ Most carriers’ liability is limited greatly by their reinsurance treaties. One carrier I spoke with has a $600,000 exposure for a hurricane. Reinsurance picks up the rest.
As long as the reinsurers are healthy and can handle the claims, I don’t think hurricanes will kill the admitted carriers.
Sinkhole losses are the enemy right now. Not canes.
Doesn’t matter. Crist won’t listen. Instead, he will turn this on those CEOs and make them out to be the bad guys – because it helps him politically. That’s the only thing that matters to Crist.
While these CEOs may be absolutley right, Crist will find a way to use this to promote himself as “defender of the little peoples,” even though he knows we’re one storm away from bankruptcy. After all, he needs votes.
Tired,
MGA’s are started to be regulated because it is such a scam right now with these Florida domiciled carriers, Bernie Maddoff was right in his discription of what is going on here. All of the money sent in to these carriers is being siphoned off to the MGA’s and when they are insolvent the owners of the MGA’s who are also the officers of the carrier, steal the money and ride off into the sunset. That is what is going on, see the following article.
Florida’s Southern Oak Agrees to Reduce MGA Fee, Wind Exposure
March 18, 2010
A Jacksonville property insurance company is back in the good graces of regulators.
Insurance Commissioner Kevin McCarty signed off on an agreement with the Southern Oak Insurance Co. after the insurer agreed to make some changes to its business plan.
Southern Oak, which insures 64,000 Florida homeowners, will stop writing policies in the high risk South Florida counties of Broward, Miami-Dade and Palm Beach until it reduces its wind risk in that region to less than 30 percent of its total exposure. Regulators had also told the company it was paying its managing general agency too much and the insurer has agreed to reduce the amount of cash it is sending to its management company.
Regulators warned Southern Oak last week that it had to be in compliance with regulatory safeguards or be at risk of losing its license.
The issue of Florida insurers diverting profits into management and reinsurance companies they own was the subject of a recent Sarasota HeraldTribune special report.
All of these companies are a Fraud on the citizens of Florida and should not be allowed to operate here.
Dear Insolvent,
You are obviously a pig who has problems with women. I do work in an independent agency and work exclusively in personal lines. I am very worried that after a storm our clients will be waiting for months to collect their claims. Not to mention the fact that th 2% to 5% wind deductibles will not be able to be paid by our insureds. Oh and Replacement cost is only provided on a reimbursement basis, so your client must replace the items before the policy will pay your claims. You know that these Florida carriers will not act like the National carriers and go ahead and pay those claims at a replacement cost basis right off the bat. We see every week the Florida Domestic market losing another carrier even before any cat claims. I am just very happy I am not a client of yours.
MR SOLVENT!!! WHAT A JOKE!.
YOUR NEW NAME IS MR. INSOLVENCY!
State Farm of Florida is not in any better shape financially than most of my carriers. Talk about hard headed- why did they create a separate operation for Florida? So the mother ship could not be sunk by a major Florida Hurricane Catastrophe and reduce their exposure within the Cat Fund. Now the real solution to all of these problems- DEREGULATION OF RATES. If ole Charlie was the problem solver that he portrays himself to be- he would have the balls to push for passage and then sign HB447, SB876 and SB2044. I doubt he has time to worry about such legislation- might interrupt his afternoon tea with the teachers unions.
And Citizens isn’t a fraud on the taxpayers???
What is your solution Sarah?
Agents association should push for allowing national carriers to charge what ever they want for Homeowners coverage. We should also push to add windstorm as an option and a earthquake opion to the National Flood policy program, which would solve the problems we had after Katrina for dual causation. Wind and water. Problem being Kansas does not really want to pay for our windstorm thats why it has to be optional for each insured to choose. This would allow the large national carriers back into the marketplace. NO I do not work for SF or Nationwide, This would be what is best for the consumer of insurance in Florida. Yes you will pay more but, you will actually get your claims paid after a hurricane.
NFIP isn’t enough of a disaster for you??
That’s not a solution.
Plus, if wind coverage goes to a national program, independent agents will suffer because the State Farm’s of the world will jump back into the property market much faster than the Travelers and Hartfords. That solution would be a death knell for many independents.
Sorry you dont like my solution. I didnt hear one from you though.
NFIP has filled a major need in providing flood insurance when carriers would not fill the need for coverage. They do a tremendous job in establishing rules and rates and flood maps to develop rates and zones. Sorry you dont have any confidence in something that has actually been a success. By the way I get 20% commission on my flood business and I do it through a write your own carrier, Auto Owners Insurance Company A++ with 6 billion in surplus who would love to write homeowners in Florida but cannot because of the catastrophe risk to the entire company because of the peril of wind in Florida. They would be here just as fast as State Farm and Nationwide.
After reading your post, it is obvious that you do not really care about your clients need to be covered by a quality carrier but your commission in your main thought when dealing with your clients.
I am just glad your not my agent.
Sarah,
The NFIP is nearly $19 Billion in debt to you and I, the taxpayers. They will never pay this back. We will eat it!. As far as Citizens is concerned, you think they will be any more responsible in paying their claims in a timely matter? If they were a real insurance company, they too would be deemed insolvent. As far as the domestics are concerned, as more carriers that spread the risk and compete will reduce the amount of premium and stabilize rates in the short term. There will always be bad businesses that are run by greedy morons (see Lehman Bros, AIG, GM, etc.) Kevin Mc Carty needs to stop talking out of both sides of his mouth and do what his office is suppose to do, oversee the industry. Greedy PA’s and sinkhole attorneys are a bigger problem than a few mismanaged MGA’s. The government has no business being in business, cause when they run a business into the ground they don’t go bankrupt, they just suck it out of you and I and continue making bad business decisions.
The State of Florida cannot print money. We will eat a whole lot more if the windstorm issue is not transfered to a federal government program. The State of florida’s economy is too small to handle the aftermath of a catastrophe.
Forget stabalizing rates, you should be conerned about what happens after a storm. Actuarily the rates being charged now are about 40% too low.
The mismanaged MGA’s you talk about are owned by the carriers who funnel money through them. This is why the DOI is coming down on them for stealing the premiums from the carriers and leaving the policyholders vulnerable to insolvency.
I agree that the Government has no business being in business but only when the private market is not providing a market. This is why we have established the NFIP and why we need to transfer wind coverage there as well, due to the fact that large national carriers who are the only insurance provides who could provide the financial security we need to write this very important and significant exposure, will not do so. You can not blame them for not allowing a few states risk the financial future of their entire billion dollar enterprise. That is just good business and risk mangagement on behalf of their shareholders and policyholders in other states. This exposure needs to be transfered to the Federal Government and administered by the homeowners carriers who write the rest of the risk.
Since when is the NFIP managed well , the are $19 Billion ( yes billion) in debt to the U.S. Treasury for subsidizing 25% of thier risk pool with inadequate rates. You must be a Socialist who does not believe in a free market economy. ( History Lesson- See the U.S.S.R. this did not work, and the Chinese figured it out before they went belly up) No further dicussion necessary. By the way, in case you hadn’t noticed the Federal Government is running out of money too. Our Populist governor should allow the rate increase and cease letting Citizens compete against the market place.
More competition will lead to lower pricing, more innovation and greater risk distribution.
Sarah, if the private market is allowed to charge the appropriate rate commensurate with the risk then there would be no need for the government to step in. I don’t understand how someone like yourself, working in a private business / agency, can be so anti free market. Have you stopped to think about the ramifications of shifting what should be a private market solution to the government? The result would be continued rate supression by politicians, higher taxes to cover the resulting deficits, more irresponsible development along the coast line (so the gov. can collect more property taxes), etc. Please spend some time thinking about this and don’t fall into the “dependency” trap. I like your comment about freedom of rate for the larger carriers, but that should also apply to the smaller carriers. Yes, there have been some bad apples who have abused the MGA system, but that doesn’t justify the government taking over the business of insuring hurricanes in FL….what a disaster that would be. I hope you spend some time really thinking this through instead of getting emotional / defensive.
tired of idiots – well said!