As Governor Charlie Crist attended the annual hurricane conference in Miami (and made clear his concerns about a proposed law deregulating large insurers' rates), a group representing Florida's independent insurance agents held a grim conference call warning that just one bad storm will send the Sunshine State and its homeowners into financial "disaster."
Among the problems, pointed out by Florida Association of Insurance Agents President Jeff Grady:
• FAIA found that nearly 40 percent of Florida’s residential property insurers lost money last year – after three years of no hurricanes. "It’s a time when the wind hasn’t blown. It suggests there is a need to more accurately price risk in this state.”
• While only 16 percent of Florida homeowners are covered by the state-backed Citizens, their coverage is subsidized by assessments on the remaining 84 percent, many of whom get coverage from smaller insurance companies that are less than three years old. Those who don’t own property also pay assessments on their auto, renters and small business coverage. FAIA says employers would have to pay a percentage of all the assessment taxes, which could also be passed on to consumers in the form of higher prices.
• Demotech, the company that rates newer, smaller insurers, recently threatened to downgrade its ratings of some insurers who relied too heavily on the underfunded CAT fund when tallying their assets. Such a downgrade could leave tens of thousands of homeowners in default of mortgage requirements.