Brian Sullivan of Risk Information, Inc.'s 'Property Insurance Report': An Open Letter to Governor Rick Scott on Florida's Insurance Market Challenges
Date Published: 02-01-2011
After a comprehensive preview of Florida's insurance market at the recent 2011 State of the Florida Insurance Market Summit, Brian Sullivan, Publisher of Risk Information, Inc.'s "Property Insurance Report," captured the essence of the information presented at the event in an "Open Letter to Governor Rick Scott of Florida," which was published in the newsletter's January 31, 2011 issue.
The letter offers the following list of solutions and considerations to help solve Florida's property insurance market challenges:
- Florida's premium prices must reflect risk. Mr. Sullivan recommends allowing Citizens Property Insurance Corporation to charge premiums that are commensurate with actuary-defined levels as the first step toward actuarial soundness throughout the market.
- Risk-based pricing must be applied to insurance premiums. Mr. Sullivan expresses skepticism with state-sponsored models and actuarial studies, however.
- Insurers must stop losing money and subsequently being turned down by the State for rate increases.
- Changes must be made slowly, in order for Florida's weakened economy to better absorb them. Mr. Sullivan suggests negotiating a phase-in period for rate increases.
- Mr. Sullivan intimates that many insurers would actually agree that Florida's property insurance market is in need of close regulation. He states that regulators' responsibilities should be to ensure insurer solvency, as well as adequate claims handling resources, so that customers are treated fairly. Regulators also should ensure that premium pricing is fair and not damaging to customers and the economy.
- Big national insurers should be encouraged to remain in Florida. Partially because of reinsurance pricing volatility, Mr. Sullivan describes Florida's over-reliance on small insurers as "folly."
- Florida should not self-insure for catastrophic storms by relying on assessments and the bond market.
- Florida should not expect to rely on the creation of a federal catastrophe fund.
- Florida must resolve to lead the nation in mitigation efforts and the development of better building codes.
The entirety of Mr. Sullivan's letter as published is attached for review.
About Brian Sullivan
Brian Sullivan, a journalist and analyst who has been covering financial services and the insurance industry for 30 years, is Editor and Publisher of two of the leading newsletters in the property and casualty insurance industry: Auto Insurance Report and Property Insurance Report. He is also chairman of the Auto Insurance Report National Conference and Property Insurance Report National Conference--two annual meetings that convene leading industry executives, investors, brokers, reinsurers and others to discuss the most important strategic issues impacting property and auto insurance.
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