We have only touched the surface of all the property insurance problems in the state of Florida.
The agents will pay the price when the entire system collapses.
All we need is another wind event to get things started.
We need the free enterprise system for the insurance industry.
Yes, PZ, you have it right. This is a perfect example of government regulation “at its finest”. To say nothing of an agency headed by a know-nothing political hack.
Primary responsibility, indeed. Everyone is quick to blame government. But these are private insurers, investors, executives, etc. who failed– nobody forced them to go into the Florida insurance business or to make bad business decisions. They thought they could make a killing but weren’t as smart as they thought they were. Govt is blamed for poor regulation when private carriers screw up; then when government tries to regulate, private carriers scream that government is to heavy-handed. The same people who don’t want regulators to govern rates or mess in private company affairs want the state to give them a guarantee that an insurer is financially sound and making all the right decisions. The big difference is Kevin McCarty as a public servant answers to the public and stands up for what he thinks is right for consumers. He has to take a lot of abuse. The private execs just sneak away quietly with no real accountability to the agents, insureds or investors they leave holding the bag. How refreshing it would be if one of these failed execs publicly apologized, took the blame, admitted the company misled regulators, and didn’t pass the buck to the public sector. This is not to say that OIR or the state is blameless but where is the private sector accountability?
The OIR has failed in it’s primary responsibility to make sure insurers are capable of paying their claims. They did it for political purposes, and threw out all logic and insurance principles to support Gov Crist “cockamamie” insurance program. Lucky for us, we have escaped hurricanes the past few years, but that won’t last. When it hits, the results will be ugly, and the insurance industry will get another huge black eye.
Companies are failing in FL and there hasn’t been a major hurricane lately – I see a weak economy, a major hurricane event and political pandering all coming together for a perfect storm.
Agree. The denial by the OIR that “Edison was in any trouble and said the Edison acquisition was a business decision Florida Peninsula made on its own” makes it clear that the OIR doesn’t know what’s going on. It’s no secret that Edison was looking for either more cash or a willing buyer.
So the fact that Edison lost it’s Demotech rating is not enough to convince the regulator that there was a financial problem there? Gee when did they file the 3rd Quarter results and take a look at them. Look for mergers and acquisitions this year but watch out who is buying who and what the performance of the book was. Why would Fl Peninsula buy a book of NEW construction risk that is not bringing enough premium to pay the bills, the fact that they will roll it to Fl Pen paper at renewal at higher rates, see we are back at the revenue part again. Give them the stinking rate increases and let them be solvent, regulate the policy form and solvency not the cash flow.
It is the OIR’s responsibility to make sure these companies have adequate capital when they get into the market. The OIR is the problem when it comes to allowing these companies to charge adequate rates. The OIR and Crist are responsible for the “magic” doubling of wind mitigation credits at the same time that insurers faced drastically rising reinsurance premiums. The OIR and Crist are responsible for driving out the deep pocket insurers who actually had the money to pay claims. The OIR and Crist orchestrated the growth of new Florida domestics while they lowered reserve requirements. At the same time, the OIR didn’t adequately supervise the management of these new companies, allowing at least one to be run by a convisted felon, another to be run by a guy with a history of not paying his debts, and another one run by a copier salesman. And we continue to see them make the problem even bigger by allowing many of these weak insurers take on more risk they can’t handle through Citizens takeouts or company mergers.
I think you missed a whole lot when it comes to private sector accountability.
For example, how many large insurers have bailed out of Florida because of the restrictions on rates? The private market accountability is to make sure the business survives and to get out of markets where they are losing money in an over-regulated insurance environment,and facing the threat of bankruptcy when a storm hits. How many employees lost their jobs because of this? What kind of damage has that done to the companies’ public image? And what kind of damage has that done to the insurance industry in general, and what will it do to the industry after we get a hurrciane and a bunch of these thinly capitalized insurers go insolvent?
The failure here lies solely with McCarty, Crist, and the OIR. Floridians and insurers will be the ones paying the price.
The government stepped in and regulated the price downward. Plain and simple. You do not need a hurricane to lose money when the government steps in to regulate price. THAT IS NOT THIER JOB!!!!
I looked into another FL co that seems to be represented by quite a few agencies and they have lost 9M in surplus from 2007 to 2008. Can’t wait to see their 2009 numbers….
Stock companies like Allstate, Nationwide, Prudential saw the writing on the wall years ago, mutual company like SF is still trying to hang on, and now your FL only companies are seeing declining reserves.
Very fragile market – probably the worst in our country.
Reinsurance is the number one expense line item for these companies. Many have policies on the books that lose them money with no claims. That’s why underwriting losses are reported.
Remember too that hurricane is not the only covered peril on a homeowner’s policy.
It is troubling to note that OIR continues to defend the start-ups as financially sound with a track record of failures that is arguably the worst in the nation. How can they be allowed to take on more risks when many have no real rating from credible rating organizations (S&P, AM Best, etc.). Most have a Demotech rating which rated Magnolia at “A” unsurpassed just prior to being taken over. If the public knew the growing percentage of business being written by “unrated” carriers, I think there would be a justified call for major change in oversight of the start-ups.
I think that some of these startups just seem like a big shell game. They come in the set up shop take over a few policies from Citizens to get on the “good side” of the OIR and try to seem like they are helping out the state – meanwhile the company execs make a nice salary probably with bonuses or some other perks. They hang in for a year or 2 and if something happens to their Funding and reserves (what a shock) then they just close up shop and move on. The agents have to try to place the policies elsewhere which since most came from Citizens – which by the way means they weren’t able to find a policy elsewhere in most cases- they go right back in to the state program with CItizens again. All we as agents are doing is just shuffling the deck, write with Citizens, takeout from citizens, company fails back to citizens to try again with the next takeout company that comes along. Round and round we go… The state needs to wake up and realize what the rest of us have already figured out!
Florida’s domestic insurers have a long, long history of failing. In the old days it was non-standard auto writers in south Florida. They dropped like flies. Now it is property writers.
Florida’s insurance environment has been abominable for thirty years. Hurricanes have just made it an insurance mortuary.
I worked in Florida for years and I always admired Bill Gunter, but now he’s up against a regime which is inured to reason.
State Farm of “Florida”…That is the first company to start this mess. State Farm of Florida is a company that was created to protect the Nationally known State Farm Parent Company. That was NOT done to protect the public and since then the State of Florida has rejected numerous other companies from doing the same thing. It was done so that when the State Farm of Florida company experienced a hurricane it could file bankruptcy and the public would foot the bill. Why isn’t State Farm writing policies now??? Is it waiting for another large rate increase to give all of its loyal customers who were deceived by thinking they have a stable company???? Why did they threaten to leave the state??? Didn’t State Farm of Florida recently say they did not have enough money to pay their claims??? We better take a hard look at making sure State Farm of Florida is a stable company!
“The government stepped in and regulated the price downward. Plain and simple. You do not need a hurricane to lose money when the government steps in to regulate price. THAT IS NOT THIER JOB!!!!”.
YES, IT IS THEIR JOB. Please tell me the last time any one of you got a 15% pay raise in one year. the companies want to save money? then start by cutting the outlandish salaries of their idiotic ceos.
I used to have a State Farm policy. Back in October, I got my renewal on my home policy and it was $9300. The year before the rate was $6600. This does not even include the 15% rate increase the State of FL just approved. I went to my local independent agent down the street and he saved me $3000 for better coverage. Good riddance State Farm….I cancelled you!
Jimmy, good for you…you made a choice to not buy SF anymore. Some people would choose to keep SF at a higher price. If they left the market, none of us would have had the choice, but would have been forced to go with a new, thinly capitalized Florida domestic. That’s probabaly where you are now.
Better coverage??? How do you know? Did the agent tell you that? I doubt it’s better coverage, and if they don’t have the reserves to pay your claim, what does it matter?
Let’s see what happens when the storm hits and you have to run to FIGA to get your claim paid.
CEO pay has almost nothing to do with insurance rates or profitability. The amounts we’re talking about are an order of magnitude different.
State Farm writes about $40 billion of premiums annually. A couple of years ago, when State Farm’s results were very good, its CEO received $15 million, most of that in a bonus tied to the company’s actual performance. That means, for every $1000 in premiums, about 35 cents went to pay the executives.
The state regulator’s job is to make sure rates are not inadequate, excessive, or unfairly discriminatory, and to protect the solvency of the system. Solvency is protected by capital requirements and monitoring rates for inadequacy. If carriers are failing left and right, the Florida regulators have not done their job to maintain the system’s health.
Instead, Florida regulators have bowed to political pressure to reduce premiums paid into the property insurance market.
Protecting solvency is by far the most important part of the regulator’s job. History and economics both show us that.
If State Farm of “Florida” is such a good choice then why can’t we get any home quotes from them except Citizens? Citizens is the last resort for any agent. My former State Farm agent wrote my neighbor a Citizens policy promising him to get a State Farm policy and that never happened. I promise you that the State Farm agent is not writing his parents a Citizens policy. State Farm of Florida, a spin off company of the parent company, cries for rate increases to pass on to people who are not wise enough to save half of their current premium. The State of Florida needs to refuse their constant rate increases and the people of Florida need to realize there are better options. I also switched from State Farm of Florida and with the savings on my home I was able to get my auto insurance premiums paid. State Farm of Florida only writes auto and not home. How many home policies did State Farm of Florida write in 2009? If State Farm of Florida won’t write my home then they are not keeping my auto.
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.
WAKE UP! THIS IS THE PLAN IN PLACE!
Its our job to create enough stink in Tallahassee that something gets done to get rid of these carriers and get the quality well run carriers back into this state.
All of the companies who created a start up company did so due to the threat of assessments to the national carrier from the State of Florida due to unfunded liabilities from the Florida Residential JUA then became Citizens. The state was going to issue bonds and any unsold bonds were going to be purchased by the carriers based on their marketshare. This created pressure on the carriers to nonrenew their homeowners business as well as create startup carriers that the companies could let go in case of a financial disaster here in florida in the aftermath of a catastrophy, 2004 type year.
State Farm of Florida agents are losing more business everyday because the people of Florida are tired of being charged higher premiums for less coverage. That is why State Farm agents are secretly opening separate agencies without the knowledge of State Farm of Florida and funneling business to them even though it is a direct violation of State Farm of Florida for their agents to offer any other coverage through other insurance providers. State Farm of Florida agents realize that it is in the best interest of the consumer to have access to available competitive and stable companies. We the people of Florida can write our policies with companies who have the right reinsurance in place and are actually making money by providing excellent coverage and minimizing outrageous commissions and bonuses to agents like State Farm of Florida has. The people are tired of paying for a name especially when they move from one home to another only to be lied to and promised a policy that they will never be able to get from State Farm of Florida. The people of Florida are seeing through the deception especially when the State Farm of Florida agents are writing ONLY Citizens polices. As for your History lesson…State Farm of Florida was NOT created to protect their policy holders and that is why the State of Florida refused multiple carriers from doing the same thing. The State of Florida is trying to protect us the public.
Well there is certainly alot of opinion here, some accurate and some so far off base it sounds like it came directly from Kevin McCarty himself.
Here is the obvious fact, The Florida market place continues to spiral downward under the current Governor and regulator. They (he) campaigned on the sole basis that Crist would demand that carriers lower their rates. Well they did only becasue they were forced to cut more and more everytime they came to the table and then the wind discounts were doubled. CEO’s are NOT making $20 million with ANY Florida carrier. Operational expenses have gone up at the same rate as everyone else. Reinsurance costs have gone up more than the increases that were approved for reinsurance costs. The Government fails to do anything efficiently and I do not think they have ever argued the fact, just look at Citizens and the 10 year assessment we are still paying on. If the GOV and Regulator think that they know the proper rates that carriers should charge and I assume that is evidenced by the rates they allow Citizens to use, then all Florida carriers should be allowed to assess the State when they have $2 billion losses like Citizens did. The regulator job is NOT to suppress rates, although it has been that way for 25 years or more. They responsibility it to make sure carriers are adequately funded but instead they make them pinch more and more off of expenses that typically floats down to agents getting commission cuts on already reduced premiums. Folks agents are not paid well in Florida and it is a direct result of the OIR demanding carriers to cut commissions for agents. How are we to provide the proper level of service and maintain all these files that the carriers used to maintain, and hire extra staff to handle the “PAPERLESS society” that was to be our saving grace, and check 40 website everyday for updates since the companies no longer send us paper to keep our records up to date and they fail to enhance their systems to integrate with our systems that we have to pay tens of thousands of dollars a year for. We have another year of the dictatorship and Crist is out on his Arss, McCarty will be right behind him. Then whoever comes in after him will hopefully understand that a company needs adequate premium and profit is NOT a bad thing. Assessments are a bad thing. and carriers better remember agents took a beating at the same time and we deserve a fair compensation. so get rid of the non commissionable fees that you shoved down our throats to cut our compensation even lower than before.
Crist and McCarty are certainly the blind leading the blind regarding the hard, cold world of insurance regulation. Both are legends in their own mind and deathly afraid of the political fallout from the reality of an open and free insurance market: the proliferation of actuarial sound rates that Floridians will have to pay in order to get insurance. If they want to live in Florida, they will just have to get used to paying those rates. The alternative is to leave Florida; there is no “right” to live here if one cannot afford the cost of doing so. Artificially suppressing rates, as McCarty and Crist so proudly do, and is a prime example of what happens when a marketplace issue becomes politicized.
I just got my home renewal with State Farm. It went up 49% ($1972 more than what I paid last year). SF thinks they are all that…I just saved $485 per year on my home and I will save another $240 on my auto by switching to another company.
Jimmy, Joe was very accurate in his explanation of the reasons for the Pup companies that State Farm came up with Allstate came up with and Auto Owners Insurance Company came up with. Almost any good national or super regional carrier has to protect the rest of the carrier from Florida claims.
Jimmys Neighbor, you should really read the article again before posting. It is in direct conflict with your position against State Farm.
Stan, you better look at the financial condition of the carrier you move to. As the article states there is a major concern that these fly by night carriers operating in Florida will not be here after the storm. If you dont care there are alot of agents on this blog who dont care whether or not the company will pay your claim as long as they get their commission check before the storm.
Stay with State Farm rather than the fly by nights.
Sarah, You and Joe sound like State Farm agents or you might be an Allstate agent. Either way you can only write for those specific companies and you are NOT writing any policies for Allstate or State Farm. You are trying to defend companies that are NOT WILLING TO WRITE POLICIES! These companies only write what they want to write and it is NOT fair to the people of Florida! The American people should be allowed to have an option to write policies with carriers that are regulated and backed by the State of Florida and that is what they are doing. You are just mad because you are losing commissions and don’t have access to the good carriers that ARE ACTUALLY WRITING POLICIES! The State of Florida is making sure our premiums don’t go straight into yours and Joe’s pockets! I will vote for them again!
Jimmy I am not a State Farm or Allstate agent. I do represent Auto Owners A++15 (best rated) I am a CPCU and a CIC and have owned my own agency for more than 30 years. The reason I am mad is because I take my profession very seriously and I look out after my clients, just as the people like Mr Grady, from FAIA and now agent and former Insurance commissioner Mr Gunter. These people understand the serious nature of having carriers that are not financially sound writing business here in Florida. I have read post on this site from guys like a Mr Solvent who on a daily basis state how great these start ups are for the industry and agents. We all know they do not have the resources to handle a catastrophe or the financial where withall to survive a CAT4 or higher storm. The reasons that the quality standard homeowners market has left Florida is because of exessive and punitive regulation from Charlie Crist and Insurance commissioner Kevin McCarty. PERIOD!. State farm is just the largest writer of homeowners in Florida, they used to maintain a 24% marketshare. That is huge and unsustainable without adequate rate relief. I say as the author of this article states, let them charge what they want and if you want to be insured by mutual of Oh My God, Go ahead. Just please dont post any complaints about the service you are getting and dont cry to anyone when your claim is being handled by FIGA. with a 300K cap.
Everyone is saying how inconfident and unreliable State Farm is. For everyone who is in doubt of State Farm go ahead and go with the insurance company down the street whose premiums are hundreds, maybe even thousands of dollars cheaper. Then when hurricane season comes and your home along with your ” cheap, but good quality” insurance company blows down the street, take a look at the homes that are being rebuilt, guarantee every homeowner who has State Farm will be satisfied. State Farm is known nation wide, if their rates our high, how do you really think that a company who isnt even half the sisze of State Farm can have rates at half the price? they cant, they dont have the financial stability. You get what you pay for, its a shame that people buy high quality homes, and inusure them with joe blow down the street
Brittany, Do you not understand that State Farm of Florida is a SEPARATE copany? State Farm does this so they can close up shop and not pay claims if a huge storm hits (not hurt the mother company). State Farm is NOT a good neighbor. My father was an agent for them for over 35 years and you would not believe the scams, fraud, ect behind the scenes. Take your blinders off.
We have only touched the surface of all the property insurance problems in the state of Florida.
The agents will pay the price when the entire system collapses.
All we need is another wind event to get things started.
We need the free enterprise system for the insurance industry.
Yes, PZ, you have it right. This is a perfect example of government regulation “at its finest”. To say nothing of an agency headed by a know-nothing political hack.
Primary responsibility, indeed. Everyone is quick to blame government. But these are private insurers, investors, executives, etc. who failed– nobody forced them to go into the Florida insurance business or to make bad business decisions. They thought they could make a killing but weren’t as smart as they thought they were. Govt is blamed for poor regulation when private carriers screw up; then when government tries to regulate, private carriers scream that government is to heavy-handed. The same people who don’t want regulators to govern rates or mess in private company affairs want the state to give them a guarantee that an insurer is financially sound and making all the right decisions. The big difference is Kevin McCarty as a public servant answers to the public and stands up for what he thinks is right for consumers. He has to take a lot of abuse. The private execs just sneak away quietly with no real accountability to the agents, insureds or investors they leave holding the bag. How refreshing it would be if one of these failed execs publicly apologized, took the blame, admitted the company misled regulators, and didn’t pass the buck to the public sector. This is not to say that OIR or the state is blameless but where is the private sector accountability?
The OIR has failed in it’s primary responsibility to make sure insurers are capable of paying their claims. They did it for political purposes, and threw out all logic and insurance principles to support Gov Crist “cockamamie” insurance program. Lucky for us, we have escaped hurricanes the past few years, but that won’t last. When it hits, the results will be ugly, and the insurance industry will get another huge black eye.
McCarty should be fired.
Companies are failing in FL and there hasn’t been a major hurricane lately – I see a weak economy, a major hurricane event and political pandering all coming together for a perfect storm.
Agree. The denial by the OIR that “Edison was in any trouble and said the Edison acquisition was a business decision Florida Peninsula made on its own” makes it clear that the OIR doesn’t know what’s going on. It’s no secret that Edison was looking for either more cash or a willing buyer.
So the fact that Edison lost it’s Demotech rating is not enough to convince the regulator that there was a financial problem there? Gee when did they file the 3rd Quarter results and take a look at them. Look for mergers and acquisitions this year but watch out who is buying who and what the performance of the book was. Why would Fl Peninsula buy a book of NEW construction risk that is not bringing enough premium to pay the bills, the fact that they will roll it to Fl Pen paper at renewal at higher rates, see we are back at the revenue part again. Give them the stinking rate increases and let them be solvent, regulate the policy form and solvency not the cash flow.
Kevin, you’ve got to be kidding!!!
It is the OIR’s responsibility to make sure these companies have adequate capital when they get into the market. The OIR is the problem when it comes to allowing these companies to charge adequate rates. The OIR and Crist are responsible for the “magic” doubling of wind mitigation credits at the same time that insurers faced drastically rising reinsurance premiums. The OIR and Crist are responsible for driving out the deep pocket insurers who actually had the money to pay claims. The OIR and Crist orchestrated the growth of new Florida domestics while they lowered reserve requirements. At the same time, the OIR didn’t adequately supervise the management of these new companies, allowing at least one to be run by a convisted felon, another to be run by a guy with a history of not paying his debts, and another one run by a copier salesman. And we continue to see them make the problem even bigger by allowing many of these weak insurers take on more risk they can’t handle through Citizens takeouts or company mergers.
I think you missed a whole lot when it comes to private sector accountability.
For example, how many large insurers have bailed out of Florida because of the restrictions on rates? The private market accountability is to make sure the business survives and to get out of markets where they are losing money in an over-regulated insurance environment,and facing the threat of bankruptcy when a storm hits. How many employees lost their jobs because of this? What kind of damage has that done to the companies’ public image? And what kind of damage has that done to the insurance industry in general, and what will it do to the industry after we get a hurrciane and a bunch of these thinly capitalized insurers go insolvent?
The failure here lies solely with McCarty, Crist, and the OIR. Floridians and insurers will be the ones paying the price.
just how is it possible that these FL based carriers are reporting u/w losses given the fact we have had no hurricanes for the last few years?
The government stepped in and regulated the price downward. Plain and simple. You do not need a hurricane to lose money when the government steps in to regulate price. THAT IS NOT THIER JOB!!!!
I looked into another FL co that seems to be represented by quite a few agencies and they have lost 9M in surplus from 2007 to 2008. Can’t wait to see their 2009 numbers….
Stock companies like Allstate, Nationwide, Prudential saw the writing on the wall years ago, mutual company like SF is still trying to hang on, and now your FL only companies are seeing declining reserves.
Very fragile market – probably the worst in our country.
Reinsurance is the number one expense line item for these companies. Many have policies on the books that lose them money with no claims. That’s why underwriting losses are reported.
Remember too that hurricane is not the only covered peril on a homeowner’s policy.
It is troubling to note that OIR continues to defend the start-ups as financially sound with a track record of failures that is arguably the worst in the nation. How can they be allowed to take on more risks when many have no real rating from credible rating organizations (S&P, AM Best, etc.). Most have a Demotech rating which rated Magnolia at “A” unsurpassed just prior to being taken over. If the public knew the growing percentage of business being written by “unrated” carriers, I think there would be a justified call for major change in oversight of the start-ups.
I think that some of these startups just seem like a big shell game. They come in the set up shop take over a few policies from Citizens to get on the “good side” of the OIR and try to seem like they are helping out the state – meanwhile the company execs make a nice salary probably with bonuses or some other perks. They hang in for a year or 2 and if something happens to their Funding and reserves (what a shock) then they just close up shop and move on. The agents have to try to place the policies elsewhere which since most came from Citizens – which by the way means they weren’t able to find a policy elsewhere in most cases- they go right back in to the state program with CItizens again. All we as agents are doing is just shuffling the deck, write with Citizens, takeout from citizens, company fails back to citizens to try again with the next takeout company that comes along. Round and round we go… The state needs to wake up and realize what the rest of us have already figured out!
Florida’s domestic insurers have a long, long history of failing. In the old days it was non-standard auto writers in south Florida. They dropped like flies. Now it is property writers.
Florida’s insurance environment has been abominable for thirty years. Hurricanes have just made it an insurance mortuary.
I worked in Florida for years and I always admired Bill Gunter, but now he’s up against a regime which is inured to reason.
State Farm of “Florida”…That is the first company to start this mess. State Farm of Florida is a company that was created to protect the Nationally known State Farm Parent Company. That was NOT done to protect the public and since then the State of Florida has rejected numerous other companies from doing the same thing. It was done so that when the State Farm of Florida company experienced a hurricane it could file bankruptcy and the public would foot the bill. Why isn’t State Farm writing policies now??? Is it waiting for another large rate increase to give all of its loyal customers who were deceived by thinking they have a stable company???? Why did they threaten to leave the state??? Didn’t State Farm of Florida recently say they did not have enough money to pay their claims??? We better take a hard look at making sure State Farm of Florida is a stable company!
“but Grady said his group would support “whatever allows companies to earn a reasonable profit”.
well, maybe if the idiotic companies weren’t paying their jerk ceos $20 million for starters..
I just want to know when the american taxpayer can expect to have a reasonable PROFIT
“The government stepped in and regulated the price downward. Plain and simple. You do not need a hurricane to lose money when the government steps in to regulate price. THAT IS NOT THIER JOB!!!!”.
YES, IT IS THEIR JOB. Please tell me the last time any one of you got a 15% pay raise in one year. the companies want to save money? then start by cutting the outlandish salaries of their idiotic ceos.
I used to have a State Farm policy. Back in October, I got my renewal on my home policy and it was $9300. The year before the rate was $6600. This does not even include the 15% rate increase the State of FL just approved. I went to my local independent agent down the street and he saved me $3000 for better coverage. Good riddance State Farm….I cancelled you!
Jimmy, good for you…you made a choice to not buy SF anymore. Some people would choose to keep SF at a higher price. If they left the market, none of us would have had the choice, but would have been forced to go with a new, thinly capitalized Florida domestic. That’s probabaly where you are now.
Better coverage??? How do you know? Did the agent tell you that? I doubt it’s better coverage, and if they don’t have the reserves to pay your claim, what does it matter?
Let’s see what happens when the storm hits and you have to run to FIGA to get your claim paid.
CEO pay has almost nothing to do with insurance rates or profitability. The amounts we’re talking about are an order of magnitude different.
State Farm writes about $40 billion of premiums annually. A couple of years ago, when State Farm’s results were very good, its CEO received $15 million, most of that in a bonus tied to the company’s actual performance. That means, for every $1000 in premiums, about 35 cents went to pay the executives.
The state regulator’s job is to make sure rates are not inadequate, excessive, or unfairly discriminatory, and to protect the solvency of the system. Solvency is protected by capital requirements and monitoring rates for inadequacy. If carriers are failing left and right, the Florida regulators have not done their job to maintain the system’s health.
Instead, Florida regulators have bowed to political pressure to reduce premiums paid into the property insurance market.
Protecting solvency is by far the most important part of the regulator’s job. History and economics both show us that.
If State Farm of “Florida” is such a good choice then why can’t we get any home quotes from them except Citizens? Citizens is the last resort for any agent. My former State Farm agent wrote my neighbor a Citizens policy promising him to get a State Farm policy and that never happened. I promise you that the State Farm agent is not writing his parents a Citizens policy. State Farm of Florida, a spin off company of the parent company, cries for rate increases to pass on to people who are not wise enough to save half of their current premium. The State of Florida needs to refuse their constant rate increases and the people of Florida need to realize there are better options. I also switched from State Farm of Florida and with the savings on my home I was able to get my auto insurance premiums paid. State Farm of Florida only writes auto and not home. How many home policies did State Farm of Florida write in 2009? If State Farm of Florida won’t write my home then they are not keeping my auto.
Mr.Solvent, Please read the above article.
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.
WAKE UP! THIS IS THE PLAN IN PLACE!
Its our job to create enough stink in Tallahassee that something gets done to get rid of these carriers and get the quality well run carriers back into this state.
All of the companies who created a start up company did so due to the threat of assessments to the national carrier from the State of Florida due to unfunded liabilities from the Florida Residential JUA then became Citizens. The state was going to issue bonds and any unsold bonds were going to be purchased by the carriers based on their marketshare. This created pressure on the carriers to nonrenew their homeowners business as well as create startup carriers that the companies could let go in case of a financial disaster here in florida in the aftermath of a catastrophy, 2004 type year.
DONT BLAME STATE FARM, BLAME CRIST AND MCCARTY.
State Farm of Florida agents are losing more business everyday because the people of Florida are tired of being charged higher premiums for less coverage. That is why State Farm agents are secretly opening separate agencies without the knowledge of State Farm of Florida and funneling business to them even though it is a direct violation of State Farm of Florida for their agents to offer any other coverage through other insurance providers. State Farm of Florida agents realize that it is in the best interest of the consumer to have access to available competitive and stable companies. We the people of Florida can write our policies with companies who have the right reinsurance in place and are actually making money by providing excellent coverage and minimizing outrageous commissions and bonuses to agents like State Farm of Florida has. The people are tired of paying for a name especially when they move from one home to another only to be lied to and promised a policy that they will never be able to get from State Farm of Florida. The people of Florida are seeing through the deception especially when the State Farm of Florida agents are writing ONLY Citizens polices. As for your History lesson…State Farm of Florida was NOT created to protect their policy holders and that is why the State of Florida refused multiple carriers from doing the same thing. The State of Florida is trying to protect us the public.
Well there is certainly alot of opinion here, some accurate and some so far off base it sounds like it came directly from Kevin McCarty himself.
Here is the obvious fact, The Florida market place continues to spiral downward under the current Governor and regulator. They (he) campaigned on the sole basis that Crist would demand that carriers lower their rates. Well they did only becasue they were forced to cut more and more everytime they came to the table and then the wind discounts were doubled. CEO’s are NOT making $20 million with ANY Florida carrier. Operational expenses have gone up at the same rate as everyone else. Reinsurance costs have gone up more than the increases that were approved for reinsurance costs. The Government fails to do anything efficiently and I do not think they have ever argued the fact, just look at Citizens and the 10 year assessment we are still paying on. If the GOV and Regulator think that they know the proper rates that carriers should charge and I assume that is evidenced by the rates they allow Citizens to use, then all Florida carriers should be allowed to assess the State when they have $2 billion losses like Citizens did. The regulator job is NOT to suppress rates, although it has been that way for 25 years or more. They responsibility it to make sure carriers are adequately funded but instead they make them pinch more and more off of expenses that typically floats down to agents getting commission cuts on already reduced premiums. Folks agents are not paid well in Florida and it is a direct result of the OIR demanding carriers to cut commissions for agents. How are we to provide the proper level of service and maintain all these files that the carriers used to maintain, and hire extra staff to handle the “PAPERLESS society” that was to be our saving grace, and check 40 website everyday for updates since the companies no longer send us paper to keep our records up to date and they fail to enhance their systems to integrate with our systems that we have to pay tens of thousands of dollars a year for. We have another year of the dictatorship and Crist is out on his Arss, McCarty will be right behind him. Then whoever comes in after him will hopefully understand that a company needs adequate premium and profit is NOT a bad thing. Assessments are a bad thing. and carriers better remember agents took a beating at the same time and we deserve a fair compensation. so get rid of the non commissionable fees that you shoved down our throats to cut our compensation even lower than before.
Amen.
Crist and McCarty are certainly the blind leading the blind regarding the hard, cold world of insurance regulation. Both are legends in their own mind and deathly afraid of the political fallout from the reality of an open and free insurance market: the proliferation of actuarial sound rates that Floridians will have to pay in order to get insurance. If they want to live in Florida, they will just have to get used to paying those rates. The alternative is to leave Florida; there is no “right” to live here if one cannot afford the cost of doing so. Artificially suppressing rates, as McCarty and Crist so proudly do, and is a prime example of what happens when a marketplace issue becomes politicized.
I just got my home renewal with State Farm. It went up 49% ($1972 more than what I paid last year). SF thinks they are all that…I just saved $485 per year on my home and I will save another $240 on my auto by switching to another company.
Jimmy, Joe was very accurate in his explanation of the reasons for the Pup companies that State Farm came up with Allstate came up with and Auto Owners Insurance Company came up with. Almost any good national or super regional carrier has to protect the rest of the carrier from Florida claims.
Jimmys Neighbor, you should really read the article again before posting. It is in direct conflict with your position against State Farm.
Stan, you better look at the financial condition of the carrier you move to. As the article states there is a major concern that these fly by night carriers operating in Florida will not be here after the storm. If you dont care there are alot of agents on this blog who dont care whether or not the company will pay your claim as long as they get their commission check before the storm.
Stay with State Farm rather than the fly by nights.
Sarah, You and Joe sound like State Farm agents or you might be an Allstate agent. Either way you can only write for those specific companies and you are NOT writing any policies for Allstate or State Farm. You are trying to defend companies that are NOT WILLING TO WRITE POLICIES! These companies only write what they want to write and it is NOT fair to the people of Florida! The American people should be allowed to have an option to write policies with carriers that are regulated and backed by the State of Florida and that is what they are doing. You are just mad because you are losing commissions and don’t have access to the good carriers that ARE ACTUALLY WRITING POLICIES! The State of Florida is making sure our premiums don’t go straight into yours and Joe’s pockets! I will vote for them again!
Jimmy I am not a State Farm or Allstate agent. I do represent Auto Owners A++15 (best rated) I am a CPCU and a CIC and have owned my own agency for more than 30 years. The reason I am mad is because I take my profession very seriously and I look out after my clients, just as the people like Mr Grady, from FAIA and now agent and former Insurance commissioner Mr Gunter. These people understand the serious nature of having carriers that are not financially sound writing business here in Florida. I have read post on this site from guys like a Mr Solvent who on a daily basis state how great these start ups are for the industry and agents. We all know they do not have the resources to handle a catastrophe or the financial where withall to survive a CAT4 or higher storm. The reasons that the quality standard homeowners market has left Florida is because of exessive and punitive regulation from Charlie Crist and Insurance commissioner Kevin McCarty. PERIOD!. State farm is just the largest writer of homeowners in Florida, they used to maintain a 24% marketshare. That is huge and unsustainable without adequate rate relief. I say as the author of this article states, let them charge what they want and if you want to be insured by mutual of Oh My God, Go ahead. Just please dont post any complaints about the service you are getting and dont cry to anyone when your claim is being handled by FIGA. with a 300K cap.
Everyone is saying how inconfident and unreliable State Farm is. For everyone who is in doubt of State Farm go ahead and go with the insurance company down the street whose premiums are hundreds, maybe even thousands of dollars cheaper. Then when hurricane season comes and your home along with your ” cheap, but good quality” insurance company blows down the street, take a look at the homes that are being rebuilt, guarantee every homeowner who has State Farm will be satisfied. State Farm is known nation wide, if their rates our high, how do you really think that a company who isnt even half the sisze of State Farm can have rates at half the price? they cant, they dont have the financial stability. You get what you pay for, its a shame that people buy high quality homes, and inusure them with joe blow down the street
Brittany, Do you not understand that State Farm of Florida is a SEPARATE copany? State Farm does this so they can close up shop and not pay claims if a huge storm hits (not hurt the mother company). State Farm is NOT a good neighbor. My father was an agent for them for over 35 years and you would not believe the scams, fraud, ect behind the scenes. Take your blinders off.