Insurance agents: Industry in trouble with low rates
More than half of Florida's residential property insurers lost money last year, in addition to the three that became insolvent and were shut down, insurance agents said Wednesday, adding ammunition to their push for higher property coverage rates.
The Florida Association of Insurance Agents said a review of the property market shows a perilous marketplace that not only puts the companies at risk, but their policyholders. The FAIA said companies are losing money – despite a couple of easy hurricane years – because “premiums have been suppressed,” and because the agents say companies are giving out artificially high discounts for hurricane hardening improvements.
“It’s a double-edged sword that has sandwiched companies between prices they are forced to pay for reinsurance and the prices they are permitted to charge their policyholders,” agents said.
“Florida has turned its back on sound insurance principles and actuarial science and needs to remove the subsidies and politics from the current system,” said Jeff Grady, the association's president. “Otherwise our future is literally blowing in the wind.”
Grady said fewer than 75 private companies write 98 percent of the residential coverage in Florida and “at least 44 of these carriers recorded underwriting losses through the third quarter 2009, with some experiencing sharp declines in their surplus.”