Unfortunately, where you get your news can determine what the news really is. Don’t believe me? Flip back and forth between CNN, FOX News, and MSNBC after a Presidential Debate or a State of the Union Address. It’s like we were all watching three different events. Personally, I have to watch several shows and visit several websites before I can be comfortable that I have an “unbiased” report of what happened. I believe our inability to readily get “unbiased” news has led to some of the political dysfunction and gridlock we are experiencing today.
However, this same phenomenon seems to apply to the Florida Property Insurance Market. There seem to be two schools of thought: (1) The market is stronger than in years past or (2) Rates are artificially low and only luck (by not having hurricanes) has saved the market. Take a look at these excerpts:
The Florida property insurance market is looking good these days, thanks to 10 years without a major hurricane event…
PROPERTYCASUALTY360.COM
After back-to-back-to-back hurricanes a decade ago, many insurers fled Florida, leaving homeowners with a few, expensive choices. Today, the market is much healthier, competitive and homegrown. The turnaround came through local entrepreneurship in cooperation with the state’s legislature, governor, cabinet, Florida Office of Insurance Regulation (OIR) and rating agencies… http://www.fpcaonline.org/advocating-for-a-healthy-and-competitive-florida-home-insurance-market
It’s true that the current hurricane-free stretch has allowed Florida’s state-sponsored insurance entities to slowly shore up their claims-paying capacity. For instance, Citizens Property Insurance Corp. boasted a healthy $7.6 billion in combined policyholder surplus in 2014. The state-run insurer simultaneously lowered its overall exposure due both to organic migration of policies to the private market as well as depopulation initiatives to transfer policies to private companies directly. The Florida Hurricane Catastrophe Fund has likewise shored up its reserves to a projected $10.95 billion at year-end 2014. Despite these encouraging figures, the misplaced public policy goal of insurance rate suppression pursued by the Legislature and past governors has led to a dysfunctional property insurance system…
http://www.rstreet.org/policy-study/lasting-reforms-for-floridas-property-insurance-market/
Property insurance is a key factor in how, in defiance of all logic, coastal real estate in Florida became a key economic driver on what is probably the most catastrophe prone strip of land in the world. Property insurance is what makes Florida’s nearly $3 trillion in coastal development possible. Unfortunately, insuring property with massive catastrophic exposure is not easy or cheap. Political intervention in chaotic post-catastrophe environments are attempts to maintain a smoothly functioning and ‘affordable’ insurance market without sacrificing votes in the process. However, the short-term politically driven responses frequently magnify long-term structural problems. As a result, the market in Florida is a highly politicized brew of public and private incentives, which is neither an effective free market nor a sensible publicly-controlled market. Rather, it is a largely closed system in which many small private companies profit through state subsidies and by taking on outsized risks. The state’s taxpayers serve as the long-term financial backstop, paying the bills when the system cracks under the weight of the inevitable storm…
http://www.nasdaq.com/article/the-unsustainable-state-of-the-florida-property-insurance-market-part-iv-cm409620#ixzz3nnshpsAW
The Florida homeowners insurance market is the strongest it has been in 10 years. Florida companies, which make up a majority of this market, have built $4.5 billion in surplus, $16 billion in reinsurance capacity and renewed profitability that has created new competition in the market. As a result, Florida consumers now have more options and choices for homeowners coverage… http://www.tampabay.com/opinion/columns/column-florida-homeowners-insurance-market-is-strong/2187983
Florida’s property insurance market shows encouraging signs heading into the 10th season since a hurricane made landfall in the state, but industry experts see plenty of room for improvement. More than $20 billion in combined cash reserves amassed by two state-run insurance giants ensure that both will remain solvent after a monster storm. Most private insurers also have seen their finances improve and homeowner’s rates are trending down. Yet Florida continues to have the most expensive property insurance premiums in the nation, and questions remain about the strength of many private insurers headquartered in the state…
http://www.nwfdailynews.com/article/20150602/news/306029995
Once a giant, insolvent mess not too long ago, conditions in Florida’s homeowners insurance market have improved of late, largely because no hurricane has made landfall in Florida since 2005. According to the National Hurricane Center, this is the longest stretch of consecutive hurricane-free years since 1851.[1] That’s a large reason why Kevin McCarty, Florida’s Insurance Commissioner, reports that the homeowners insurance market in Florida is the strongest in 10 years…In fact, Florida may have taken a bad rap, McCarty claims. He points out that while 12 homeowners insurance companies failed in Florida over the past 10 years, today there are 119 companies with homeowner’s policies in the state. It is actually sinkhole claims that have cost the state’s insurers billions in recent years, a claims crisis that the Florida Legislature has successfully addressed. Having endured and survived one of the worst economies since the Great Depression, Florida’s homeowners insurance industry has returned to profitability, McCarty says…
http://www.einsurance.com/journal/2014-florida-homeowners-insurance-update/
Florida’s nine-year streak of avoiding hurricanes is helping the state reach a historic milestone: for the first time ever, the state-created fund designed to help pay out claims after storms has enough cash and assets on hand to pay off everything it could owe. New estimates show the Florida Hurricane Catastrophe Fund should have $17 billion available for the Atlantic hurricane season that starts June 1…
http://jacksonville.com/breaking-news/2015-05-14/story/floridas-hurricane-insurance-fund-strong-storm-season
Are rates artificially low? Is the market strong and profitable? Are the domestic carriers strong enough to withstand a storm? Does the state have the capacity to withstand a significant event? Depends on who you ask.
