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

 Capitalism and economic venture are alive and well in the Florida insurance market.  The Florida Underwriter reported this month that over 1.7 million policies have been written by new insurance companies since the 2004 hurricane season.  As Allstate, State Farm and Nationwide retreat from the Florida property insurance market, these new insurance companies are accepting risks that would otherwise end up with Citizens Property Insurance Corporation.

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 June 1st starts another hurricane season.  USA Today quoted the Climate Prediction Center as saying, "there's no reason to think that break [from hurricanes over the past two years] will continue."  In short, they think the probabilities are good (or bad, if you think about it) that a few times this year somebody, somewhere, is going to get whacked along the coastal areas. There are several things people and businesses should do now to prepare and then to remember as the season progresses. 

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Allstate Insurance Company has reportedly canceled or non-renewed more than 500,000 Florida property insurance policies over the last five years.  The decision to cut those policies was made by Allstate management.  Where were the insurance industry spin and propaganda people--often referred to as "spokespersons" of various insurance industry trade associations--to say that the victims of that decision were Allstate agents? The decision to raise the remaining Allstate policy rates an average of over 40%, after promising much lower rates to Florida government officials, was made by Allstate management. 

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 It's about time.  For a decade, Allstate has refused to comply with discovery and court rules regarding its internal documents which demonstrate who, how and why Allstate redesigned everything in its claims program to simply pay less on claims. The Florida First District Court of Appeal issued an opinion which condemns many of the tactics Allstate and its attorneys have long used to thumb its nose at judges. 

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That's the annual revenue of United Casualty parent, Unitrin, a company with a branded glass tower at One Wacker Drive in Chicago.  To put things in perspective, even if United Casualty had paid policy limits to our clients for damages caused to their homes by Hurricane Charley, it would have probably still been shy of the $4.1 million CEO Richard C. Vie made in 2006, according to Forbes Magazine. Associated Press reporter Anthony McCarthy offers a glimpse of how over 40 low-income families are still living in mold-infested homes, some in very poor health as a result, nearly four years after the storm hit. I wonder if that sort of CEO compensation is justified when leadership risks shareholder value simply because it can't live up to the services promised at the very core of its product.  I will bet that the senior management have never been to one of their customer's homes in Arcadia before or after the loss.  It is pretty obvious what the company management wants out of the relationship with its policyholder customers.

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Our firm has a videotape somewhere in our library of a former State Farm adjuster that was known as a Claim Re-inspector.  He is now a public adjuster in Tennessee, still very religious, and a person I run into at conferences once in a while.  Every time I hear the term "claim leakage," I think of him, the role he played at State Farm, why he left after being "pegged" for management, and his videotape.

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If another hurricane the size of Katrina or stronger strikes a metropolitan area this summer or fall, I am certain that we will have a repeat of the litigation and problems associated with Katrina.  On May 8, the United States Senate voted against increasing the role of the National Flood Insurance Program to include coverage for "wind" peril. (See Miami Herald, Chicago Tribune, Biloxi Sun Herald) The Senators supporting the measure were from the coastal states most effected by hurricanes.  These southern Senators and their constituency are increasingly facing the problem that private property insurance carriers will not sell a policy that covers the perils posed by a hurricane.

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If there is any question about whether consumers or insurance company officials have the power and control the legislative process, all one has to do is read the Linn's Stamp News article of May 12, 2008.  It speaks for itself:

Bill set to name post office for lobbyist By Bill McAllister, Washington Correspondent Nothing in Washington more shows congress' control of the United States Postal Service than its practice of naming hundreds of local post offices in honor of community heroes, often for military personnel killed in Iraq. Rep. Lamar Smith (R-Texas) got a lot of attention April 15 when The Washington Post disclosed that the Republican wants to name a San Antonio post office after what the report called "a prominent, very-much-alive lobbyist." Columnist Jeffrey H. Birnbaum also reported that Smith's renaming legislation began moving through the House on the day that the lobbyist's employer donated $5,000 to him. Smith's bill is to honor Cyndi Taylor Krier, the vice president of Texas government relations for USAA, a large financial services and insurance company based in San Antonio, by naming a post office for her. Krier's employer, USAA, provides banking, insurance and financial services for active, reserve, retired and former service members and their dependents in the United States and overseas. Krier, 57, was described as a longtime Texas politician and officeholder whose grandfather, grandmother and mother worked for the Postal Service.

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The article in today's Tampa Tribune regarding a Federal Wind Insurance debate comes as no surprise.  Amazing how big Insurance is adopting Enterprise Risk Theory to further its interest.  Since large corporations in the insurance field are not so much interested in how they make money, just that they make as much as safely possible, it is no wonder they are making the case for Federal wind coverage.

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Florida Chief Financial Officer Alex Sink has claimed that the recent legislative session was favorable to consumers of insurance.  It was, but it left a lot to be desired. While not noted as significant legislation, Senate Bill 2860 contains a renewed agenda concerning Citizens as a primary insurer versus an insurer of last resort.  Private market advocates should be happy to see a commission has been established to study this.  Personally, I think this is good and Florida should try to keep out of the insurance business as much as possible.  "Free enterprise" is important and while government has a significant role regulating insurance, there is a definite difference between being the regulator and the government being the operator. 

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