My Tuesday morning last week started with an early interview with a Tampa radio station, WFLA, regarding the Citizens Mission Review Task Force. Insurance rates, caps to rate increases, bankruptcy of the state, and hurricanes could only make the morning radio news in Florida. What happened to the debate about Sarah Palin’s sexiness? Anything is more exciting than topics discussed by actuaries.
Then at 8 a.m. sharp, our very able Chairman, Bruce Douglas, called the meeting to order. For the next four hours, I kept thinking that the concept of an "actuarial sound rate" could only be devised by the nerdiest debaters among us. Its concepts are arcane, deep in statistics and risk, and not clearly defined. Thank God we have very capable (and I guess equally nerdy) Office of Insurance Regulators, such as Task Force Member Belinda Miller and Commissioner Kevin McCarty. I am convinced that the consumers and policyholders in Florida have a very special advocate in Tallahassee, unlike citizens of other states I have recently mentioned.
Fortunately, we passed the caps to Citizen’s rate hikes and kept the eligibility requirements the same. If implemented, the extraordinary rate hikes which could be imposed on some next year will not happen. A good day for consumers.
The humorous side to the meeting Tuesday was the appearance of my client, Carolyn Patterson, at the meeting. She saw me on the Monday night news and then emailed, asking if the meeting was public because she wanted to watch and talk to somebody at Citizens about her problems with an insurance company. I made a point in the meeting about Ms. Paterson’s problem, and the next thing I know, Chairman Douglas has her testify. Since the press was talking with her when she finished, I imagine that my once unknown client might be quoted by the press regarding the horrors of being a "takeout" customer. During her testimony, she deadpanned that she showed me some language of her new policy, and that even I could not understand it. This resulted in some laughter from the audience and embarrassment for me.
After the session ended, I tried to explain what I think we did as a group to three newspapers and another television station. I recognize that the issues are very important, but I have never dreamed that issues of insurance rates, which will take effect a year from now, could ever be this newsworthy. The problem is that we are just making suggestions for legislation. The big fights will take place later this spring. We did not directly address the biggest issue.
The biggest question which needs to be answered by all the intelligent, nerdy actuaries and financial types is:
If we get into a really big hurricane season or another Hurricane Andrew, is there any way to avoid Florida’s bankruptcy and inability to pay claims?
From what I have heard about the current scheme so far, the answer is no. Nobody wants to hear this. It is almost impossible to contemplate that the Catastrophe Fund will not operate to save us. But in some of the limited discussions we had on this topic, my impression is that no actuary is guaranteeing anything if a big disaster hits. All bets are off at that point. We will be charting new financial waters similar to what we are doing now with our economy. A few mentioned that Florida will have to look for a bailout. Seems like that line is pretty long right now.