Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

Florida newspapers (Tampa Tribune, St. Petersberg Times, Sun- Sentinel) reported on the recommendations of the Florida Senate Select Committee on Property Insurance Accountability, a committee formed in response to the insurance industry misleading Governor Crist and the Legislature about rates during last years legislative session.  Because of these misrepresentations Florida provided under-market prices for reinsurance and assumed greater risk in the event of a hurricane in return for lower rates.  The insurance industry then raised rates after getting the favorable legislation. The letter from the Committee to Senate President Ken Pruitt contains significant and progressive recommendations to help consumers.  A memorandum also indicated that the work of the Committee was not done and that the Select staff would be working with standing committees to help shape legislation protecting consumers. Finally, there appear to be some serious and well conceived changes to help insurance consumers.   The big insurance lobbyists were not pleased, and that is usually a sign that something has been done to help the insurance customers -- all most large insurers seem to care about is return on investment, even dishonorably like they did last year.  Even our governmental representatives have learned that you cannot trust big insurance.

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Is the Insurance Industry Trying to Justify Increases in Rates or Simply Justifying Leaving the Risk Business Along Coastal areas?  These questions came to my mind after reading an article in the February 2008 edition of Natural Hazards Review.  The article, Normalized Hurricane Damage in the United States: 1900-2005 , claims that by 2020 a $500 billion dollar hurricane loss could happen in South Florida.  Of course, those are in 2020 dollars -- but that is off the charts compared to any previous loss. The study was made primarily by people working for the insurance industry.  Accordingly, some bias may exist and consumer activists may find my questions justified.  The $500 million figure seems surreal given the Katrina's calculated damage was $156 billion dollars.  The study has two undeniable findings and conclusions.  First, the population along coastal areas has grown.  Thus, more property is in potential danger of hurricanes.  The most concentrated areas are South Florida, Tampa, and the greater Houston area.  All three areas have experienced significant population increases over the past century.  Second, the per capita wealth has also increased over that period.  Not only are more people and properties in harm's way, these people have more and more expensive properties at risk.  In simple terms, we have more and better stuff to insure on an individual basis. These statistics are important.  Determining the amount at risk and the amount of available insurance is important to a community and state. Since we cannot expect people are going to move away from the coast, the obvious long term solution is better risk management.  The enforcement of building codes and stronger building codes are inevitable.

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