Insurers should be able to charge as high a premium as they want. If they want to be competitive, they will find the market will dictate the rates, which is a cornerstone of our free market system. If they are too high, clients will leave them left and right in favor of other options. Remember, no one has ever been forced to purchase a policy from State Farm, even though Crist says they charge more than anyone else. If that’s the case, why have they been the largest insurer in Florida for decades? It’s because people use other factors in addition to price when making purchasing decisions, such as a company’s ability to pay it’s claims, the experience of the claims organization, or their relationship with their agent.
However, if their price is too low, the insurance dept needs to regulate their premiums to make sure they will be solvent and able to pay claims. The insurance dept should also regulate claims and underwriting practices.
Don’t know what you’re talking about in regards to Obama, but the primary problems with the Florida property insurance market were created by Charlie Crist, in my opinion.
Sounds like these smaller insurance companies will be suing the state to allow them to charge whatever they want. Hey If we want these insurance companies to have enough money to pay these claims, we have to allow them to charge whatever they want!!!!!! Is that not what State Farm is saying they need to do.
this is not good, if you’re only doing this for the big companies. small companies should have the same opportunity. if folks want to share it has to be for all, not for some. if this bill is passed and not vetoed, i’d be suing as unconstitutional. this is unfair trade and practices.
State Farm State Farm State Farm, maybe this bill is here because of them but it deals with so many other companies. I do agree that all insurance companies should have been included in this bill but we can add them later, lets get deregulation started and get our industry going the right direction again. Governor, pass this bill we need real insurance companies to come back to Florida not investment groups.
A lawsuit on this would be counterproductive to the real need here, which is deregulation of rates for all insurers. This is the first step in getting the stringent price controls off all insurers and getting the property insurance system back to sanity, which we desperately need in Florida.
By the way, small insurers would be benefitting from all those people who don’t want to pay the higher premiums. Do you think there are more people out there today looking to pay more for their insurance if they are currently insured by one of the small companies? No.There will still be a mass exodus from the big companies in favor of the smaller companies simply due to price.
But if the big companies pull out of Florida completely, then the system will be almost totally dependent on the Cat Fund, which currently is estimated to be $18 Billion short. That shortfall will grow tremendously, and the gap between what the state has or can borrow to pay claims will be bigger, possibly bankrupting the state.
Charlie Crist has screwed this system up terribly. I suggest that knowledgeable insurance people focus on fixing the major problems in Florida:
1) The state now runs the largest insurance company, Citizens.
2) The Cat Fund reinsurance program is estimated to be $18 billion short without enough bonding capacity to meet the needs after a hurricane.
3) A National Catastrophe Fund would allow Florida to spread the risk nationally, but will be opposed by people living in states with less exposure.
The current state budget is stretched to the limit, and not able to withstand much more of a strain. If we don’t fix the property insurance system in Florida, we could very well end up with a state income tax.
Seems to me insurance companies not in the Florida homeowners market would be having a fall down tantrum if de-reg passes. Can you say “multi-policy discount”? Game the system, car insurance rates would fall drastically if the captive big boys get their change. Not very transparent, or is it?
The website you listed, Carl, is known to consistently publish info that is way off base or completely untrue. I work for a large company whose Legal Dept had to take action against this site…
My agent tells me they will not be renewing me this coming year due to not getting a rate increase they need. He then tells me the company I got a home quote from has little to no assets and I should not insure with them. When I ask him where he will insure me once I am not renewed he says Citizens. Everything I read says Citizens is the last place to be. The agent I got the quote from says the newer company is reinsured with Lloyds and is growing. Would State Farm really stay at this point? Should I go with Citizens or go with a newer private company? Will this new company take me next year when I am not renewed? Will deregulation really work if only some companies can charge what they want?
Any company can do business in FL right now on an Excess and Surplus / non-admitted basis. You don’t need a law to exempt them. What is to stop the BIG companies from swinging rates and forcing out the smaller carriers? I would think if the company presents a rate request that is backed actuarially to the ORI that it should be given approval or at the least stepped into place over a period of years.
ok, so if these big companies raise rates, forcing folks to join the citizens insurance, which if you have read lately, has been approved a rate increase. despite these rate increase, they still fall short in solvency to pay out for a major disaster.
Wayne, if the State Farm non-renewal plan goes through, then most likely your options will be Citizens or one of the much smaller carriers. Either way, you end up dependent on the Florida Cat Fund which is $18 billion short.
If I were you, I would hold on to my State Farm policy as long as I can, and only transition if they actually end up non-renewing you. By law, they must give you 180 days notice on non-renewals, so you will have plenty of time to find coverage. Your State Farm agent will have options for you.
Deregulation of the price controls is appropriate for the entire Florida Property insurance market, but regulations regarding solvnecy and market conduct would and should still be in place. This bill is a step in the right direction, but it’s not a complete fix by any means.
So, what you are saying is that carriers should be allowed to riase the rates whenever they feel like it? Deregualtion of the insurance industry. Isn’t that like having the fox watch the hen house? We need regualation to keep companies honest. To the person who condemned Obama. Look back to see who actually created the fiasco we are in. Not Obama, but the wonderful Ronnie and Alan Greenspan.
Well they didn’t poll REAL people, people already paying outrageous prices. Sorry 62% is an outright LIE! PLEASE stop polling only the insurance companies!!! BYE BYE STATEFARM!!!
For all you folks who think the insurance companies are right up there with Pol Pot and Hitler, let me present some facts for you.
Threre are two types of states out there in the insurance market place: those that regulate prices and those that let market competition set prices.
Florida has chosen the former course and as a result has some of the highest rates in the country. MA, MI, NY, and PA are a few other states that choose to meddle in the insurance market place. Their rates are also outrageous.
Other states choose to let insurance companies duke it out. The result is that states like TN, GA, OH and ID have low insurance prices. I live in GA and I pay well under $500 a year for $350k in cov A and $500k in CPL. Sure I don’t have hurricanes to deal with, so the premium will be less, but the same policy in a price regulated state is triple the price.
Insurance companies have a vested interest in having the lowest price possible. Why? Because they need customers. Continuously raising rates means they lose customers. Much like the price of TVs and computers, over time improvements in process and technology means that it becomes cheaper to be in business. Reductions in the cost of doing business means that prices come down. Even if five insurance companies raised rates, one would decide to grow and they’d drop prices to grow. Once that happens the other companies have to compete or lose market share. Competition is a breautiful thing.
Do some research. Over the past 8 years insurance prices have steadily come down for most consumers. The reality is that some companies are jerks. The reality is that 20-30% of your premium is to pay for some other jerk committing insurance fraud. The reality is that your politicians have a vested interest in your turning to them for solutions: if you can’t think for yourself, they get to think for you.
The Insurance Department in Florida is up a creek without a paddle. If a major hurricane hits it’ll cost the citizens of Florida billions in assessments. Heaven forbid we let people CHOOSE what they want to pay for insurance. People get to vote with their money every day. Gas price too high at Chevron you drive to the Texaco to check the price there. It’s the same thing in insurance – find someone with the coverage and price you want. But don’t tell me what I have to pay.
Wow, we haven’t heard from Kathy the raving lunatic insurance company hater in a while. Insurance companies have to charge what is necessary to cover the cost of coverage and make a profit. You probably consider their profits huge, they aren’t. If the companies can’t cover costs and make a profit, they leave. You people in Florida will be the ones suffering when the next big storm hits and all the stupid moves the goverment has made there with property insurance cause a second catastrophe. But, you hate insurance companies so nothing will change your mind until that actual collapse. Numbers mean nothing to people such as yourself, just your feeling that you personally pay too much. I genuinly feel sorry for the people of Florida who are being so badly served by their politicians.
Here’s a question for you critics – where do you think the money is going to come from for the next hurricane? We, as citizens of FL, are going to pay either way. If we don’t pay for it now with well capitalized companies, we are assessed (fancy gov’t term for tax) after the fact…if you don’t believe it, look at your insurance bill, any insurance bill and the 3 to 4 current assessments from the 2004/05 storm season.
It just blows me away when critics offer no solution. There are only two ways to pay for the claims – and they both involve you and me either way.
At least let ME have the choice. Let me pick who I trust with my money for my insurance. That what HB 1171 is all about. I do not need the government choosing for me!!!
Insurance is the only industry where prices are set BEFORE they know what their costs will be. If I make widgets, I know what they cost to manufacture, so I set a price with a profit margin in place. If I run an insurance company I use statistical and actuarial data from prior years and other industry figures and try to guess what my costs will be. Price too high and I lose customers. Price too low and I don’t turn a profit.
Just in case you’re slow to catch on, that means it’s really hard to be accurate. You’ll hear about insurance company profits. Did you know that the Property insurance market turned in a 118 combined for the first quarter? For those of you not in the industry, that means that for every dollar insurance companies spent, they lost another 18 cents. For those of you who aren’t business savvy that means they lost a ton of money in this market. Most companies shoot for a combined ratio of about 92% for property, which means for every dollar they spend, they make a profit of 8 cents. If you’re bad at math, that’s 8%.
Go shop at Bloomingdales – what do you think the markup on their product is? Do you really think that little cotton t-shirt cost $35 to make? How about a pair of cotton underpants at Victoria’s Secret? Do you think there’s something special about them that it cost $12 to make them? How about buying a soda at a restaurant. It costs the restaurant under 5 cents per glass of soda, but they charge you $1.97. Talk about a profit margin!
Insurance companies actually have one of the lowest profit margins in major industry. But they’re evil! They want to make a *gasp* profit! Insurance companies are for-profit companies. And that’s a good thing. You can buy insurance from one of thoes start-up companies. But when no one is around to write you a check when your house burns down, or blows over, or gets robbed, don’t be surprised.
The fact is that the people of Florida are getting what they paid for, or didn’t pay for, that is to have low insurance rates, AAANNNDDD…this I did not know, have NO state income tax! They look to government to protect them from unscrupulous insurance companies who take money out of the market(as premiums) and supposedly do not put any back (pay claims). Floridians want government to operate but without any funding? No wonder their market is a shambles; putting price controls on insurnance rates only stifled profitability, it did not bring “sanity” to the market. This scenario has run its course and it takes a threatened withdrawal for people to see that what they sow, they also reap. Low, actuarially unsound insurance rates coupled with no income tax? why bother to have government at all, if this is the best they can do?
Insurance is not government. People complain about their insurance rates like taxes. The two are very different. First you can change insurance carriers, dont tell my clients though. Second, The quality of insurance carriers differs drastically. You can be insured by one of these sorry start up carriers or you could be insured by a carrier who employees thousands of employees who are there to assist you in a catastrophe and pride themselves on their ability to pay and pay claims well.
The Mortgage Meltdown and Financial Crisis is which the US is in now, was caused by deregulation
There was a failure to regulate institutions like AIG, Bank of America, Citigroup. Some of these Banks do investments and even insurance and some even have international operations.
The Fed Chairman Bernanke is moving into regulating the Financial Industry. One regulator will regulate everything
While the Fed Chairman and the Treasury are going to be regulating everything, Floridians are going the other way. Deregulation will result in failure. it’s good that it will be limited to the State of FL
Miami, will have a new source for scams,
Scam #1 during the mortgage bubble mortgage companies were making loans to dead people.
Scam #2 are “Credit Repair” companies that will fix your credit, after the ruined with the ARM that adjusts after 1 year
Scam # 3 Loan Modification, individuals are paying $2,000 or more up-front lo have their loans modified
The deregulated insurance business will become Scam #4
Those institutions were not de regulated. The regulations went uninforced. There is a difference. Kind of like our immigration laws. The regulations are in place. They are not being enforced. And in that situation I look to those in charge to ask ‘why aren’t you enforcing the laws?’. What is being discussed in Florida is not deregulation. It is a restoration of business practices that are used in other states, and were used in Florida up and until an amateur, Charlie Crist, decided he could overlook hundreds of years of successful insurance history and conjure adequate rates out of his pantleg. To make himself look good to voters. Remove the amateur from the equation, and you are on the right path to recovery. If he isn’t smart enough to figure out our difficult, challenging and very interesting industry, let him go be a lawyer or something a little easier.
HELLLOOOOO….Insurance is a company based on spreading the risk, correct! So they S-P-R-E-A-D the risk by collecting premiums ALL across the country (and don’t use the crap about people in Ohio having to pay for Hurricanes because WE in Florida pay for all the natural disasters across the country which happen more frequently then hurricanes do!) And any moron can Google the insurance companies profits and CEO’s outrageous pay and know that they are raping us. The very worst thing that Florida did was allow Florida only companies, like State Farm Florida. It is simply a joke! I personally know people up north that have had more damage from a hurricane then ANYONE I know in Florida. As for the reason they want to pull out of Florida is because they want everything THEIR way and to charge more and more and more with no regulations. If Florida would force them to take ALL their business out if they pull their homeowners insurance out of here then THAT my friend would put a hurting on their wallets because you and I know that their gravy train is in car, life, and annuities. So if they want all the profit and none of the risk then bye bye!
Are you KIDDING Mr. Nobody???? Are you REALLY saying that the insurance companies do not make HUGE profits??? Really….you MUST be kidding or out of your mind! You can call me a raving lunatic but the facts are the facts! Each year the top insurance companies, (YES including State Farm) have BOASTED about their RECORD profits to their shareholders, meanwhile crying the blues and begging for increases to their customers and to elected officials.
Now as far as the “collapse” that is simply FEAR MONGORING done by people like you! Funny how 6 generations of my family have lived in Florida and not a ONE of them has had damage by a hurricane, not one! You and your cronies are just doomsday type of people who get their thrills by trying to scare people out of their hard earned money! Get a life dude!!
Ok, give me the percent of profit for each of the top companies. Let’s compare those profits to other industries, for Florida only. I don’t think you will because it would not reinforce your raving lunatic attitude towards insurance companies. Do you have a clue how rates are even determined for your state? I doubt it. Here is the question you have never answered, if there is so much profit taking for property in Florida by these raping insurance companies, why are they pulling out of the property business? Stop listening to the idiots in charge of your government there and start doing your own thinking.
Kathy, the depth of your knowledge of the insurance industry, mechanism and the mess your state has made of insurance laws is incredible. You literally know nothing about this industry. You post the same LIES over and over and think they are true. I have asked you to do some actual research on the subject and educate yourself on the truth of the matter and you just spout the same old trash. I will have to ignore your posts from now on since you make no effort to learn. I will say this one more time, the mess in Florida with the market if the fault of the current government, not insurance companies. I’m sorry for the mess your elected officials have made, but it’s your problem and your responsiblity. No more wasting my time talking to a person who refuses to do more than spout nonsense. You will now be able to get the last word Kathy. You are welcome to it.
By the way, MOST of the information below was copied from THIS Insurance Journal so if it is a lie, then consider the source!
• Over the last 10 years, the property / casualty and life / health insurance industries have each enjoyed annual profits exceeding $30 billion.
• The insurance industry takes in over $1 trillion in premiums every year. It has $3.8 trillion in assets, more than the GDPs of all but two countries.
• The CEOs of the top 10 property / casualty firms earned an average of $8.9 million in 2007. The CEOs of the top 10 life / health insurance earned an average of $9.1 million.
• The median insurance CEO’s cash compensation is $1.6 million per year, leading all industries.
• State Farm Insurance’s chairman and CEO received an 82 percent raise after the company posted a record profit last year, a statement from the Bloomington-Ill.-based insurer said this week.
• Chairman and Chief Executive Officer Ed Rust Jr. got a $5.26 million raise. He earned $11.66 million in 2006 with a base salary of $1.77 million and results-based bonus of $9.89 million, the statement said. Rust made $6.4 million in 2005 and $5.5 million in 2004.
• The absence of a major catastrophe helped the insurer generate a record $5.32 billion profit last year, compared to $3.24 billion in 2005 when Hurricane Katrina hit the Mississippi Gulf Coast, release said.
Forbes Magazine reported Liddy’s (Allstate’s CEO) total compensation for 2006 to be $18 million, and his 5-year compensation total to be $70 million. In 2005, Liddy’s compensation total was $27 million.
who pays. we all do.
Comment:
4. STATE FARM
CEO: Edward B. Rust Jr. 2007 compensation $11.7 million
HQ: Bloomington, IL
Profits: $5.5 billion (2007)
Assets: $181.4 billion70
As the biggest property casualty insurance company in America, State Farm has become notorious for its deny and delay tactics. In many cases, the company has gone to extreme lengths to avoid paying claims, including forging signatures on earthquake waivers after the deadly Northridge earthquake, and altering engineering reports regarding damage after Hurricane Katrina.
Hurricane Katrina showed State Farm at its worst. One of the deadliest natural disasters in U.S. history, Hurricane Katrina made landfall on August 29, 2005, near Buras, Louisiana. The storm killed nearly 1,600 people and caused $135 billion in damages.
One of the legacies of the storm was the widespread dissatisfaction with the response of State Farm and other insurance companies. State Farm would later claim it had settled 99 percent of its cases, but regulators criticized the company for -. The company claimed that any house that had what they considered water damage did not constitute a claim in the first place. In fact, the Louisiana Department of Insurance reported that it was contacted by 9,000 consumers seeking help resolving disputes with their insurance companies.
State Farm denied the claims of the Nguyen family of Mississippi, who lost their home in Hurricane Katrina. State Farm’s own engineers concluded that the damage was caused by wind and even cited eyewitnesses who saw another house picked up by the wind and thrown into the Nguyens’ home. State Farm, however, hired another engineering firm to come to a different conclusion and then denied the claim, saying the damage was caused by flooding. State Farm also denied the claims of Dean Barras in Louisiana. Barras’s home was exposed to the elements for two weeks, but State Farm’s response was “the chimney was not built properly.”
Bob Kochran, CEO of an engineering firm assessing Katrina damage for State Farm, said that he was asked to alter reports with which the company did not agree. In order to keep the State Farm contract, Kochran agreed to tell his engineers to “re-evaluate each of our assignments.” One of the engineers, Randy Down, responded in an email, “I have a serious concern about the ethics of this whole matter. I really question the ethics of someone who wants to fire us simply because our conclusions don’t match theirs.” State Farm’s attempt to unduly influence the engineers was exposed during litigation in Jackson, Mississippi.
One such angry policyholder was United States Senator Trent Lott. Lott, who had long counted on insurance companies for support, became an industry critic after his beachfront house was destroyed by Hurricane Katrina and his subsequent claim was denied by State Farm. Lott eventually settled with State Farm, but went on to sponsor legislation requiring insurers to provide “plain English” summaries of what their policies did and did not cover. Hurricane Katrina had highlighted insurance company use of such things as anti-concurrent clauses, which led policyholders into believing they were covered from the risks of hurricanes, when in fact subsequent flooding might wipe out any chance of a claim being paid. “They don’t want you to know what you really have covered,” said Lott.78
In April 2007, State Farm agreed to re-evaluate more than 3,000 Hurricane Katrina claims, and within a few months had paid nearly $30 million in additional settlements. 79When a grand jury later issued subpoenas probing new claims against State Farm, the company sued Mississippi Attorney General Jim Hood. Hood decried the lawsuit, saying the company’s agreement to reopen claims had never been intended as “blanket immunity” from future probes.80
Like Allstate, State Farm used consulting giant McKinsey & Co. The McKinsey concept involves cutting spending on claims payments to boost profits. Agents steeped in the McKinsey way speak of the “three D’s”- deny the claim, delay the payment, and then do anything to defend against a lawsuit.
In 1994, the Northridge earthquake in California killed 57 people, injured 9,000, and caused an estimated $33.8 billion in damage. It was the costliest earthquake in U.S. history, and insurance companies such as State Farm did everything they could to avoid having to pay for it. After it hit, a State Farm employee testified that company officials forged signatures on earthquake waivers to avoid paying quake-related claims and then withheld evidence when the company was sued. State Farm and other insurers accused of mishandling Northridge claims were fined over $3 billion in penalties; however, State Farm never actually paid the fines. Instead, an insurance department whistleblower would eventually reveal that the insurers donated $12 million to two non-profit foundations created by insurance commissioner Chuck Quackenbush in what amounted to little more than a bribe.81
In 1999, a series of powerful tornadoes killed 44 people in Oklahoma and caused $1.8 billion in damages. Homeowners brought a class-action suit against State Farm, alleging the company had tried to undervalue damage to homes or claim damage was caused by other factors such as faulty construction. A jury eventually ruled that State Farm acted “recklessly” and “with malice” and disregarded its duty to policyholders. The firm that State Farm used to allegedly undervalue damage was Haag Engineering-the same firm that would be accused of mishandling Katrina claims six years later.82
In 1999, despite Oklahoma tornado claims, State Farm earned $1.03 billion in profits after taxes.83 In 2005, despite Hurricane Katrina, State Farm turned a $3.24 billion profit. The following year, without a major catastrophe, profits increased to $5.32 billion, for which CEO Ed Rust received an 82 percent pay raise.84 In fact, since State Farm hired McKinsey, the company has seen profits more than double from its 1990s level to the $5.4 billion it made in 2007.
Following the same tactic as Allstate, State Farm has embarked upon a campaign of market withdrawals and non-renewals in the aftermath of Katrina. State Farm has stopped writing new homeowners policies in Mississippi and Florida, and in the latter state non-renewed a further 75,000 policyholders.85 Just as they did in the aftermath of Katrina, State Farm stopped writing new homeowner policies.
While State Farm will do anything to fight a claim once it has been taken to court, the company has never been shy about using the courts to its own advantage, even when it has to first stack the deck. In the 2004 Illinois Supreme Court election, one justice-Lloyd Karmeier- received huge amounts from State Farm employees, lawyers, and groups to which the insurer belonged. Karmeier won the election and soon after cast a crucial vote reversing a $9 billion judgment against State Farm
Almost…
Insurers should be able to charge as high a premium as they want. If they want to be competitive, they will find the market will dictate the rates, which is a cornerstone of our free market system. If they are too high, clients will leave them left and right in favor of other options. Remember, no one has ever been forced to purchase a policy from State Farm, even though Crist says they charge more than anyone else. If that’s the case, why have they been the largest insurer in Florida for decades? It’s because people use other factors in addition to price when making purchasing decisions, such as a company’s ability to pay it’s claims, the experience of the claims organization, or their relationship with their agent.
However, if their price is too low, the insurance dept needs to regulate their premiums to make sure they will be solvent and able to pay claims. The insurance dept should also regulate claims and underwriting practices.
Don’t know what you’re talking about in regards to Obama, but the primary problems with the Florida property insurance market were created by Charlie Crist, in my opinion.
Sounds like these smaller insurance companies will be suing the state to allow them to charge whatever they want. Hey If we want these insurance companies to have enough money to pay these claims, we have to allow them to charge whatever they want!!!!!! Is that not what State Farm is saying they need to do.
this is not good, if you’re only doing this for the big companies. small companies should have the same opportunity. if folks want to share it has to be for all, not for some. if this bill is passed and not vetoed, i’d be suing as unconstitutional. this is unfair trade and practices.
State Farm State Farm State Farm, maybe this bill is here because of them but it deals with so many other companies. I do agree that all insurance companies should have been included in this bill but we can add them later, lets get deregulation started and get our industry going the right direction again. Governor, pass this bill we need real insurance companies to come back to Florida not investment groups.
A lawsuit on this would be counterproductive to the real need here, which is deregulation of rates for all insurers. This is the first step in getting the stringent price controls off all insurers and getting the property insurance system back to sanity, which we desperately need in Florida.
By the way, small insurers would be benefitting from all those people who don’t want to pay the higher premiums. Do you think there are more people out there today looking to pay more for their insurance if they are currently insured by one of the small companies? No.There will still be a mass exodus from the big companies in favor of the smaller companies simply due to price.
But if the big companies pull out of Florida completely, then the system will be almost totally dependent on the Cat Fund, which currently is estimated to be $18 Billion short. That shortfall will grow tremendously, and the gap between what the state has or can borrow to pay claims will be bigger, possibly bankrupting the state.
Charlie Crist has screwed this system up terribly. I suggest that knowledgeable insurance people focus on fixing the major problems in Florida:
1) The state now runs the largest insurance company, Citizens.
2) The Cat Fund reinsurance program is estimated to be $18 billion short without enough bonding capacity to meet the needs after a hurricane.
3) A National Catastrophe Fund would allow Florida to spread the risk nationally, but will be opposed by people living in states with less exposure.
The current state budget is stretched to the limit, and not able to withstand much more of a strain. If we don’t fix the property insurance system in Florida, we could very well end up with a state income tax.
If you want to read the truth about the behavior of some of these big companies, go to http://www.badfaithinsurance.org.
I’m sure that all the information on that site is perrrrfectly accurate. Right. If it’s posted on the web it must be true!
Seems to me insurance companies not in the Florida homeowners market would be having a fall down tantrum if de-reg passes. Can you say “multi-policy discount”? Game the system, car insurance rates would fall drastically if the captive big boys get their change. Not very transparent, or is it?
The website you listed, Carl, is known to consistently publish info that is way off base or completely untrue. I work for a large company whose Legal Dept had to take action against this site…
My agent tells me they will not be renewing me this coming year due to not getting a rate increase they need. He then tells me the company I got a home quote from has little to no assets and I should not insure with them. When I ask him where he will insure me once I am not renewed he says Citizens. Everything I read says Citizens is the last place to be. The agent I got the quote from says the newer company is reinsured with Lloyds and is growing. Would State Farm really stay at this point? Should I go with Citizens or go with a newer private company? Will this new company take me next year when I am not renewed? Will deregulation really work if only some companies can charge what they want?
Any company can do business in FL right now on an Excess and Surplus / non-admitted basis. You don’t need a law to exempt them. What is to stop the BIG companies from swinging rates and forcing out the smaller carriers? I would think if the company presents a rate request that is backed actuarially to the ORI that it should be given approval or at the least stepped into place over a period of years.
I know more than half of you idiots voted for Obama. But last time I looked we were still a free market capitalist society.
Let them charge whatever they want!
ok, so if these big companies raise rates, forcing folks to join the citizens insurance, which if you have read lately, has been approved a rate increase. despite these rate increase, they still fall short in solvency to pay out for a major disaster.
Wayne, if the State Farm non-renewal plan goes through, then most likely your options will be Citizens or one of the much smaller carriers. Either way, you end up dependent on the Florida Cat Fund which is $18 billion short.
If I were you, I would hold on to my State Farm policy as long as I can, and only transition if they actually end up non-renewing you. By law, they must give you 180 days notice on non-renewals, so you will have plenty of time to find coverage. Your State Farm agent will have options for you.
Deregulation of the price controls is appropriate for the entire Florida Property insurance market, but regulations regarding solvnecy and market conduct would and should still be in place. This bill is a step in the right direction, but it’s not a complete fix by any means.
So, what you are saying is that carriers should be allowed to riase the rates whenever they feel like it? Deregualtion of the insurance industry. Isn’t that like having the fox watch the hen house? We need regualation to keep companies honest. To the person who condemned Obama. Look back to see who actually created the fiasco we are in. Not Obama, but the wonderful Ronnie and Alan Greenspan.
Well they didn’t poll REAL people, people already paying outrageous prices. Sorry 62% is an outright LIE! PLEASE stop polling only the insurance companies!!! BYE BYE STATEFARM!!!
For all you folks who think the insurance companies are right up there with Pol Pot and Hitler, let me present some facts for you.
Threre are two types of states out there in the insurance market place: those that regulate prices and those that let market competition set prices.
Florida has chosen the former course and as a result has some of the highest rates in the country. MA, MI, NY, and PA are a few other states that choose to meddle in the insurance market place. Their rates are also outrageous.
Other states choose to let insurance companies duke it out. The result is that states like TN, GA, OH and ID have low insurance prices. I live in GA and I pay well under $500 a year for $350k in cov A and $500k in CPL. Sure I don’t have hurricanes to deal with, so the premium will be less, but the same policy in a price regulated state is triple the price.
Insurance companies have a vested interest in having the lowest price possible. Why? Because they need customers. Continuously raising rates means they lose customers. Much like the price of TVs and computers, over time improvements in process and technology means that it becomes cheaper to be in business. Reductions in the cost of doing business means that prices come down. Even if five insurance companies raised rates, one would decide to grow and they’d drop prices to grow. Once that happens the other companies have to compete or lose market share. Competition is a breautiful thing.
Do some research. Over the past 8 years insurance prices have steadily come down for most consumers. The reality is that some companies are jerks. The reality is that 20-30% of your premium is to pay for some other jerk committing insurance fraud. The reality is that your politicians have a vested interest in your turning to them for solutions: if you can’t think for yourself, they get to think for you.
The Insurance Department in Florida is up a creek without a paddle. If a major hurricane hits it’ll cost the citizens of Florida billions in assessments. Heaven forbid we let people CHOOSE what they want to pay for insurance. People get to vote with their money every day. Gas price too high at Chevron you drive to the Texaco to check the price there. It’s the same thing in insurance – find someone with the coverage and price you want. But don’t tell me what I have to pay.
Wow, we haven’t heard from Kathy the raving lunatic insurance company hater in a while. Insurance companies have to charge what is necessary to cover the cost of coverage and make a profit. You probably consider their profits huge, they aren’t. If the companies can’t cover costs and make a profit, they leave. You people in Florida will be the ones suffering when the next big storm hits and all the stupid moves the goverment has made there with property insurance cause a second catastrophe. But, you hate insurance companies so nothing will change your mind until that actual collapse. Numbers mean nothing to people such as yourself, just your feeling that you personally pay too much. I genuinly feel sorry for the people of Florida who are being so badly served by their politicians.
Nice post Reality Check.
Here’s a question for you critics – where do you think the money is going to come from for the next hurricane? We, as citizens of FL, are going to pay either way. If we don’t pay for it now with well capitalized companies, we are assessed (fancy gov’t term for tax) after the fact…if you don’t believe it, look at your insurance bill, any insurance bill and the 3 to 4 current assessments from the 2004/05 storm season.
It just blows me away when critics offer no solution. There are only two ways to pay for the claims – and they both involve you and me either way.
At least let ME have the choice. Let me pick who I trust with my money for my insurance. That what HB 1171 is all about. I do not need the government choosing for me!!!
Insurance is the only industry where prices are set BEFORE they know what their costs will be. If I make widgets, I know what they cost to manufacture, so I set a price with a profit margin in place. If I run an insurance company I use statistical and actuarial data from prior years and other industry figures and try to guess what my costs will be. Price too high and I lose customers. Price too low and I don’t turn a profit.
Just in case you’re slow to catch on, that means it’s really hard to be accurate. You’ll hear about insurance company profits. Did you know that the Property insurance market turned in a 118 combined for the first quarter? For those of you not in the industry, that means that for every dollar insurance companies spent, they lost another 18 cents. For those of you who aren’t business savvy that means they lost a ton of money in this market. Most companies shoot for a combined ratio of about 92% for property, which means for every dollar they spend, they make a profit of 8 cents. If you’re bad at math, that’s 8%.
Go shop at Bloomingdales – what do you think the markup on their product is? Do you really think that little cotton t-shirt cost $35 to make? How about a pair of cotton underpants at Victoria’s Secret? Do you think there’s something special about them that it cost $12 to make them? How about buying a soda at a restaurant. It costs the restaurant under 5 cents per glass of soda, but they charge you $1.97. Talk about a profit margin!
Insurance companies actually have one of the lowest profit margins in major industry. But they’re evil! They want to make a *gasp* profit! Insurance companies are for-profit companies. And that’s a good thing. You can buy insurance from one of thoes start-up companies. But when no one is around to write you a check when your house burns down, or blows over, or gets robbed, don’t be surprised.
Well said – preach’n to the choir though.
The fact is that the people of Florida are getting what they paid for, or didn’t pay for, that is to have low insurance rates, AAANNNDDD…this I did not know, have NO state income tax! They look to government to protect them from unscrupulous insurance companies who take money out of the market(as premiums) and supposedly do not put any back (pay claims). Floridians want government to operate but without any funding? No wonder their market is a shambles; putting price controls on insurnance rates only stifled profitability, it did not bring “sanity” to the market. This scenario has run its course and it takes a threatened withdrawal for people to see that what they sow, they also reap. Low, actuarially unsound insurance rates coupled with no income tax? why bother to have government at all, if this is the best they can do?
Insurance is not government. People complain about their insurance rates like taxes. The two are very different. First you can change insurance carriers, dont tell my clients though. Second, The quality of insurance carriers differs drastically. You can be insured by one of these sorry start up carriers or you could be insured by a carrier who employees thousands of employees who are there to assist you in a catastrophe and pride themselves on their ability to pay and pay claims well.
Insurance is not government!
The Mortgage Meltdown and Financial Crisis is which the US is in now, was caused by deregulation
There was a failure to regulate institutions like AIG, Bank of America, Citigroup. Some of these Banks do investments and even insurance and some even have international operations.
The Fed Chairman Bernanke is moving into regulating the Financial Industry. One regulator will regulate everything
While the Fed Chairman and the Treasury are going to be regulating everything, Floridians are going the other way. Deregulation will result in failure. it’s good that it will be limited to the State of FL
Miami, will have a new source for scams,
Scam #1 during the mortgage bubble mortgage companies were making loans to dead people.
Scam #2 are “Credit Repair” companies that will fix your credit, after the ruined with the ARM that adjusts after 1 year
Scam # 3 Loan Modification, individuals are paying $2,000 or more up-front lo have their loans modified
The deregulated insurance business will become Scam #4
We need to thank our legislators for this
Those institutions were not de regulated. The regulations went uninforced. There is a difference. Kind of like our immigration laws. The regulations are in place. They are not being enforced. And in that situation I look to those in charge to ask ‘why aren’t you enforcing the laws?’. What is being discussed in Florida is not deregulation. It is a restoration of business practices that are used in other states, and were used in Florida up and until an amateur, Charlie Crist, decided he could overlook hundreds of years of successful insurance history and conjure adequate rates out of his pantleg. To make himself look good to voters. Remove the amateur from the equation, and you are on the right path to recovery. If he isn’t smart enough to figure out our difficult, challenging and very interesting industry, let him go be a lawyer or something a little easier.
HELLLOOOOO….Insurance is a company based on spreading the risk, correct! So they S-P-R-E-A-D the risk by collecting premiums ALL across the country (and don’t use the crap about people in Ohio having to pay for Hurricanes because WE in Florida pay for all the natural disasters across the country which happen more frequently then hurricanes do!) And any moron can Google the insurance companies profits and CEO’s outrageous pay and know that they are raping us. The very worst thing that Florida did was allow Florida only companies, like State Farm Florida. It is simply a joke! I personally know people up north that have had more damage from a hurricane then ANYONE I know in Florida. As for the reason they want to pull out of Florida is because they want everything THEIR way and to charge more and more and more with no regulations. If Florida would force them to take ALL their business out if they pull their homeowners insurance out of here then THAT my friend would put a hurting on their wallets because you and I know that their gravy train is in car, life, and annuities. So if they want all the profit and none of the risk then bye bye!
Are you KIDDING Mr. Nobody???? Are you REALLY saying that the insurance companies do not make HUGE profits??? Really….you MUST be kidding or out of your mind! You can call me a raving lunatic but the facts are the facts! Each year the top insurance companies, (YES including State Farm) have BOASTED about their RECORD profits to their shareholders, meanwhile crying the blues and begging for increases to their customers and to elected officials.
Now as far as the “collapse” that is simply FEAR MONGORING done by people like you! Funny how 6 generations of my family have lived in Florida and not a ONE of them has had damage by a hurricane, not one! You and your cronies are just doomsday type of people who get their thrills by trying to scare people out of their hard earned money! Get a life dude!!
Ok, give me the percent of profit for each of the top companies. Let’s compare those profits to other industries, for Florida only. I don’t think you will because it would not reinforce your raving lunatic attitude towards insurance companies. Do you have a clue how rates are even determined for your state? I doubt it. Here is the question you have never answered, if there is so much profit taking for property in Florida by these raping insurance companies, why are they pulling out of the property business? Stop listening to the idiots in charge of your government there and start doing your own thinking.
Kathy, the depth of your knowledge of the insurance industry, mechanism and the mess your state has made of insurance laws is incredible. You literally know nothing about this industry. You post the same LIES over and over and think they are true. I have asked you to do some actual research on the subject and educate yourself on the truth of the matter and you just spout the same old trash. I will have to ignore your posts from now on since you make no effort to learn. I will say this one more time, the mess in Florida with the market if the fault of the current government, not insurance companies. I’m sorry for the mess your elected officials have made, but it’s your problem and your responsiblity. No more wasting my time talking to a person who refuses to do more than spout nonsense. You will now be able to get the last word Kathy. You are welcome to it.
By the way, MOST of the information below was copied from THIS Insurance Journal so if it is a lie, then consider the source!
• Over the last 10 years, the property / casualty and life / health insurance industries have each enjoyed annual profits exceeding $30 billion.
• The insurance industry takes in over $1 trillion in premiums every year. It has $3.8 trillion in assets, more than the GDPs of all but two countries.
• The CEOs of the top 10 property / casualty firms earned an average of $8.9 million in 2007. The CEOs of the top 10 life / health insurance earned an average of $9.1 million.
• The median insurance CEO’s cash compensation is $1.6 million per year, leading all industries.
• State Farm Insurance’s chairman and CEO received an 82 percent raise after the company posted a record profit last year, a statement from the Bloomington-Ill.-based insurer said this week.
• Chairman and Chief Executive Officer Ed Rust Jr. got a $5.26 million raise. He earned $11.66 million in 2006 with a base salary of $1.77 million and results-based bonus of $9.89 million, the statement said. Rust made $6.4 million in 2005 and $5.5 million in 2004.
• The absence of a major catastrophe helped the insurer generate a record $5.32 billion profit last year, compared to $3.24 billion in 2005 when Hurricane Katrina hit the Mississippi Gulf Coast, release said.
Forbes Magazine reported Liddy’s (Allstate’s CEO) total compensation for 2006 to be $18 million, and his 5-year compensation total to be $70 million. In 2005, Liddy’s compensation total was $27 million.
: HISTORY
who pays. we all do.
Comment:
4. STATE FARM
CEO: Edward B. Rust Jr. 2007 compensation $11.7 million
HQ: Bloomington, IL
Profits: $5.5 billion (2007)
Assets: $181.4 billion70
As the biggest property casualty insurance company in America, State Farm has become notorious for its deny and delay tactics. In many cases, the company has gone to extreme lengths to avoid paying claims, including forging signatures on earthquake waivers after the deadly Northridge earthquake, and altering engineering reports regarding damage after Hurricane Katrina.
Hurricane Katrina showed State Farm at its worst. One of the deadliest natural disasters in U.S. history, Hurricane Katrina made landfall on August 29, 2005, near Buras, Louisiana. The storm killed nearly 1,600 people and caused $135 billion in damages.
One of the legacies of the storm was the widespread dissatisfaction with the response of State Farm and other insurance companies. State Farm would later claim it had settled 99 percent of its cases, but regulators criticized the company for -. The company claimed that any house that had what they considered water damage did not constitute a claim in the first place. In fact, the Louisiana Department of Insurance reported that it was contacted by 9,000 consumers seeking help resolving disputes with their insurance companies.
State Farm denied the claims of the Nguyen family of Mississippi, who lost their home in Hurricane Katrina. State Farm’s own engineers concluded that the damage was caused by wind and even cited eyewitnesses who saw another house picked up by the wind and thrown into the Nguyens’ home. State Farm, however, hired another engineering firm to come to a different conclusion and then denied the claim, saying the damage was caused by flooding. State Farm also denied the claims of Dean Barras in Louisiana. Barras’s home was exposed to the elements for two weeks, but State Farm’s response was “the chimney was not built properly.”
Bob Kochran, CEO of an engineering firm assessing Katrina damage for State Farm, said that he was asked to alter reports with which the company did not agree. In order to keep the State Farm contract, Kochran agreed to tell his engineers to “re-evaluate each of our assignments.” One of the engineers, Randy Down, responded in an email, “I have a serious concern about the ethics of this whole matter. I really question the ethics of someone who wants to fire us simply because our conclusions don’t match theirs.” State Farm’s attempt to unduly influence the engineers was exposed during litigation in Jackson, Mississippi.
One such angry policyholder was United States Senator Trent Lott. Lott, who had long counted on insurance companies for support, became an industry critic after his beachfront house was destroyed by Hurricane Katrina and his subsequent claim was denied by State Farm. Lott eventually settled with State Farm, but went on to sponsor legislation requiring insurers to provide “plain English” summaries of what their policies did and did not cover. Hurricane Katrina had highlighted insurance company use of such things as anti-concurrent clauses, which led policyholders into believing they were covered from the risks of hurricanes, when in fact subsequent flooding might wipe out any chance of a claim being paid. “They don’t want you to know what you really have covered,” said Lott.78
In April 2007, State Farm agreed to re-evaluate more than 3,000 Hurricane Katrina claims, and within a few months had paid nearly $30 million in additional settlements. 79When a grand jury later issued subpoenas probing new claims against State Farm, the company sued Mississippi Attorney General Jim Hood. Hood decried the lawsuit, saying the company’s agreement to reopen claims had never been intended as “blanket immunity” from future probes.80
Like Allstate, State Farm used consulting giant McKinsey & Co. The McKinsey concept involves cutting spending on claims payments to boost profits. Agents steeped in the McKinsey way speak of the “three D’s”- deny the claim, delay the payment, and then do anything to defend against a lawsuit.
In 1994, the Northridge earthquake in California killed 57 people, injured 9,000, and caused an estimated $33.8 billion in damage. It was the costliest earthquake in U.S. history, and insurance companies such as State Farm did everything they could to avoid having to pay for it. After it hit, a State Farm employee testified that company officials forged signatures on earthquake waivers to avoid paying quake-related claims and then withheld evidence when the company was sued. State Farm and other insurers accused of mishandling Northridge claims were fined over $3 billion in penalties; however, State Farm never actually paid the fines. Instead, an insurance department whistleblower would eventually reveal that the insurers donated $12 million to two non-profit foundations created by insurance commissioner Chuck Quackenbush in what amounted to little more than a bribe.81
In 1999, a series of powerful tornadoes killed 44 people in Oklahoma and caused $1.8 billion in damages. Homeowners brought a class-action suit against State Farm, alleging the company had tried to undervalue damage to homes or claim damage was caused by other factors such as faulty construction. A jury eventually ruled that State Farm acted “recklessly” and “with malice” and disregarded its duty to policyholders. The firm that State Farm used to allegedly undervalue damage was Haag Engineering-the same firm that would be accused of mishandling Katrina claims six years later.82
In 1999, despite Oklahoma tornado claims, State Farm earned $1.03 billion in profits after taxes.83 In 2005, despite Hurricane Katrina, State Farm turned a $3.24 billion profit. The following year, without a major catastrophe, profits increased to $5.32 billion, for which CEO Ed Rust received an 82 percent pay raise.84 In fact, since State Farm hired McKinsey, the company has seen profits more than double from its 1990s level to the $5.4 billion it made in 2007.
Following the same tactic as Allstate, State Farm has embarked upon a campaign of market withdrawals and non-renewals in the aftermath of Katrina. State Farm has stopped writing new homeowners policies in Mississippi and Florida, and in the latter state non-renewed a further 75,000 policyholders.85 Just as they did in the aftermath of Katrina, State Farm stopped writing new homeowner policies.
While State Farm will do anything to fight a claim once it has been taken to court, the company has never been shy about using the courts to its own advantage, even when it has to first stack the deck. In the 2004 Illinois Supreme Court election, one justice-Lloyd Karmeier- received huge amounts from State Farm employees, lawyers, and groups to which the insurer belonged. Karmeier won the election and soon after cast a crucial vote reversing a $9 billion judgment against State Farm
‘why aren’t you enforcing the laws?’ They are not being enforced……….. why – is- that. The big????? RE: RE: State Farm Insurance company behavior
Gov Criss will not allow Large Insurance Companies to charge whatever they feel like it
Big Insurers will become a Monopoly and the Consumers will get killed
This would be the same than allowing FPL to do the same. The price of electricity would go to the roof
Insurance is like a tax on consumers and businesses, high insurance rates will be a restrain of FL’s economy
Republicans need to keep taxes low and keep insurance rates lower to estimulate FL’s economy