I wonder if they’ll just shift some expense lines over to the insurance business, making the MGA payment closer to pure profit., with no net change in amount left to pay claims.
1. Start a company with borrowed 5 million.
2. Create a MGA to administer (Ha) the company. (Read this article above)
3 Charge a huge percentage 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.
Not quite a ponzi as the investors always get their money back. Those who don’t are the policyholders when they need coverage the most.
Again I’ll say, not all startups are get rich quick schemes (for the investors and corporate officers) and it’s wrong to lump them all together. That said, I’ll admit that there are enough questionable carriers and individuals that ALL startups need scrutiny by agents, regulators, and insureds.
The MGA model was established in Florida post Andrew to attract smaller investors to the FLorida market as the big nat’l carriers were exiting the state after massive losses. The MGA’s by law are allowed to provide services to the insurance company for a fee. The model continues to exist for several reasons:
(1) The OIR does not want Ins. Co.’s making a big profit as the voters and politicians would be upset.
(2) Any profits in the Ins. Co. would require a dividend to the investors without an MGA and would require OIR approval. OIR doesn’t like that as voters and politicians would not like that. Profit is a dirty word.
(3) OIR continues to make sure rates are suppressed – the Gov. brags that since he took office property rates have actually fallen 16% ( a lot less than his current chances of winning the Senate race). Then why all those assessments from the CPIC? B/C the rates are inadequate.
(4) The OIR continually comes up with ideas to reduce rates for the policyholders. Wind mitigation was jammed down the companies throats without any rate offset for unmitigated homes. Actuaries at the Dept. know this is an unacceptable practice. But the voters and politicians liked this.
There is a theme here. OIR and politicians like when they do things for consumers b/c of votes not b/c it is the right thing to do.
They should be ashamed of themselves. Capital will continue to dry up in the Sunshine State as the pinch on MGA’s will continue and Natl Carriers continue to reduce exposure will make CPIC the biggest it has ever been. Look out for the assessments.
Nough said!
These start up carriers are owned by the same guys who own the MGA’s. they suck all the money out of the so called insurance carriers then leave them for dead when a hurricane hits Florida. The problem is they are so greedy in their plans that the carriers are failing even before the catastrophe hits.
I think the guy Bernie Madoff had it right. Follow the money.
I wonder if they’ll just shift some expense lines over to the insurance business, making the MGA payment closer to pure profit., with no net change in amount left to pay claims.
More smoke and mirrors…it will take a BIG ONE to wake the FL legislators up to the insurance crisis in the State.
These start up carriers are a PONZI!
1. Start a company with borrowed 5 million.
2. Create a MGA to administer (Ha) the company. (Read this article above)
3 Charge a huge percentage 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
Not quite a ponzi as the investors always get their money back. Those who don’t are the policyholders when they need coverage the most.
Again I’ll say, not all startups are get rich quick schemes (for the investors and corporate officers) and it’s wrong to lump them all together. That said, I’ll admit that there are enough questionable carriers and individuals that ALL startups need scrutiny by agents, regulators, and insureds.
The MGA model was established in Florida post Andrew to attract smaller investors to the FLorida market as the big nat’l carriers were exiting the state after massive losses. The MGA’s by law are allowed to provide services to the insurance company for a fee. The model continues to exist for several reasons:
(1) The OIR does not want Ins. Co.’s making a big profit as the voters and politicians would be upset.
(2) Any profits in the Ins. Co. would require a dividend to the investors without an MGA and would require OIR approval. OIR doesn’t like that as voters and politicians would not like that. Profit is a dirty word.
(3) OIR continues to make sure rates are suppressed – the Gov. brags that since he took office property rates have actually fallen 16% ( a lot less than his current chances of winning the Senate race). Then why all those assessments from the CPIC? B/C the rates are inadequate.
(4) The OIR continually comes up with ideas to reduce rates for the policyholders. Wind mitigation was jammed down the companies throats without any rate offset for unmitigated homes. Actuaries at the Dept. know this is an unacceptable practice. But the voters and politicians liked this.
There is a theme here. OIR and politicians like when they do things for consumers b/c of votes not b/c it is the right thing to do.
They should be ashamed of themselves. Capital will continue to dry up in the Sunshine State as the pinch on MGA’s will continue and Natl Carriers continue to reduce exposure will make CPIC the biggest it has ever been. Look out for the assessments.
Nough said!
Rater,
These start up carriers are owned by the same guys who own the MGA’s. they suck all the money out of the so called insurance carriers then leave them for dead when a hurricane hits Florida. The problem is they are so greedy in their plans that the carriers are failing even before the catastrophe hits.
I think the guy Bernie Madoff had it right. Follow the money.