Florida Insurance Broker Can’t Take It Any Longer

By John K. Handel | May 5, 2009

Well, I’m sorry but I just cannot take it any longer.

To quote our very own Insurance Commissioner: “I must also finally break down and respond to some of the more recent articles. Errors in fact and rhetorical assertions, unsubstantiated by objective empirical (sic) findings, are not only misleading to the public, they reflect a severe lack of understanding of both fundamental economics and the basics of insurance.”

I absolutely agree with him. The problem is that most of that applies to the Office of Insurance Regulation and the Commissioner himself.

I was in the Florida insurance game in 1992 and witnessed the effects of Andrew. As I recall, about a dozen Florida companies went belly up within 48 hours of the storm. These were mostly legitimate companies that simply made a major mistake in writing too much South Florida business at very cheap prices. Several of them had been in business for a few years and had legitimate financial ratings. Many others were very similar to today’s “take out” companies. No money, no experience.

But we don’t have to worry about that again because we haven’t had a major storm since 1992 (gulp!) and “we have had over 50 companies and risk bearing entities come into the market since 1992.”

“Granted, the new entrants are not of the size of the old line, major property insurers, but then again, new firms generally do not start out as behemoths, they grow into it”. Unless of course their name is Citizens, then it happens almost immediately.

But don’t worry, the take outs all have “A” ratings (which I am reliably informed, is simply a matter of satisfying the “Entry” fee).

And then of course there is the “mandate” that Citizens had to charge the highest rates in the market. Try asking an independent agent why he was forced to place business in Citizens…. the answer inevitably is “because they were the cheapest on the block and if I didn’t do it, some other agent would use Citizens to steal my business”.

I don’t believe that agents or insureds want to see the end of Citizens (or the OIR).If it ceased to be a political football, or a bureaucrats dream project or a financial nightmare waiting to happen, then it could have a legitimate place in the Florida scene.

To quote the commissioner yet again: “Unfortunately, the basic conditions necessary for such an outcome are structurally absent and would be virtually impossible to introduce”.

So it seems, I am between a rock and a hard place…. I apparently agree with the commissioner on many aspects…. but I don’t feel he knows what he’s talking about. Maybe he’s just committing a terminological inexactitude.

Then there’s the response from no less than a Florida politician. One of his early paragraphs starts out “My Bill….” So he can’t have an axe to grind….can he?

Handel is a Florida wholesale insurance broker from St. Petersburg who has underwritten property business since 1983.

Topics Agencies Florida

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