See what the Florida regulatory body is doing to those insurers which are willing to write insurance in the State. See the information provided by two reputable sources, a FAIFA lobbyist, and a FAIFA spokesman and a respected Ocala Allstate Agent.
You may have reviewed my articles regarding the underwriting environment of Florida’s Citizen’s Property Insurance Corporation as well as the reductions given to some but not all of the residential policyholders pertaining to Condominium Insurance, whether or not such rate rollbacks were warranted.
Although the Citizen’s premiums have lowered, without regard to whether the rates were adequate, one must look into the increased surcharges taxes and assessments which are made not only under the Citizen’s policies but likewise the assessments which are taxed against all insurers doing business in the State of Florida.
These assessments and surcharges have increased substantially so that any premiums which were reduced previously may not even show a decrease in the overall cost, but nevertheless assist the Citizen's surpluses. However, the demand for a lower premium was resolved as promised without regard to whether the rates were adequate. Essentially the citizens of Florida requested a decrease in premiums and the premiums were reduced only to be increased by the amounts of surcharges and taxes.
Many insurers refuse to do business in the State of Florida. Not only are the assessments and fees promulgated by the State of Florida steadily increasing, but the treatment of those insurers who are willing and able to provide a competitive market place in Florida, are not even given reasonable opportunity to defend their positions.
What was stated by Kevin W. McDonald, a very respected Allstate Agent and the Article entitled “Homeowners Insurers under Regulatory Seige” written by Tim Meehan, FAIFA Lobbyist and comments by FAIFA spokesman Bob Lotane are included for your review.
From: McDonald, Kevin W
Sent: Friday, January 18, 2008 4:57 PM
Subject: FW: FAIFA Reaction - Homeowner Insurers Under Regulatory Seige
Ladies and Gentlemen,
I am proud to say that the Allstate agents of Florida have won their day in court, and we have been allowed to return to writing business as usual. The damage done to our industry though, and the potential impact these actions may have had on our competitive marketplace may take some time to tally. I humbly request that each of you exert the influence you have to help turn our state back to an environment that is welcoming to business, with a vibrant and competitive marketplace. Rather than one where the regulatory practices are abusive of their authority.
Please review the attached release from FAIFA, and you will understand my passion.
With much respect,
Kevin W. McDonald, Agency Principal
McDonald & Company Insurance Agency, Inc.
Ocala/The Villages, FL 34474
|Homeowner Insurers Under Regulatory Seige|
By Tim Meenan, FAIFA Lobbyist
I honestly didn't think that State Government in Florida could top last January, 2007's special session on homeowner's insurance reform. I was wrong. FAIFA is outraged over the recent actions taken by the Office of Insurance Regulation forcing Allstate to cease writing all new business across all lines. FAIFA is reaching out to the legislature, CFO Sink's office, and the Governors office, among others, to attempt to bring this "hostage crises" to a quick end. We will have some additional announcements to make next week regarding our efforts to let Tallahassee hear loud and clear that this poisonous regulatory environment needs to be replaced with meaningful dialogue about how to bring vibrant insurance markets to Florida to assure our consumers have competition in the market, and many companies from which to purchase products and services.
FAIFA understands that regulators and insurance companies can have disagreements regarding rating issues, whether or not companies are following the law, how hurricane models impact rates, and other important issues. While we don't like it, the system is designed to allow legal disputes regarding all these issues to be hard fought in Tallahassee. What we cannot agree with is the use of the issuance of an "immediate final order" in the circumstance in which it was used in Tallahassee against Allstate this week. All state agencies have the ability to issue an "order to show cause" when they perceive a regulated entity has violated the law. Insurers receiving an "order to show cause" may continue to operate while the agency and the insurer go to court and fight over the issue at hand. An "immediate final order" ("IFO") is only used when the agency determines the existence of "an immediate danger to the public health safety or welfare." IFO's are used when an insurer has ceased paying claims, or an unlicensed company or agent is selling insurance, or other egregious circumstances. An IFO takes effect immediately, without the chance to state your case. Allstate can and has appealed the IFO to the District Court of Appeal, but the damage is done to you, the agent. Allstate will win on the issue of whether the failure to turn over documents in this case constitutes an "immediate danger to the public health safety or welfare" of Floridians...IT DOES NOT.
On February 4th and 5th, American Strategic, Nationwide, Hartford, Florida Farm Bureau, and Allstate have been called before a new "Senate Select Committee on Property Insurance Accountability." It is being chaired by both Senator Jeff Atwater, and Senator Steve Geller. It's comprised of members of both the Senate Banking and Insurance Committee, as well as the Senate Judiciary Committee. The idea is to put insurance companies under oath and force them to justify why the legislative reforms enacted in January 2007 have not promised the rate reductions the Legislature and the OIR promised. This is reminiscent of what they did a couple of years ago to the medical malpractice insurance companies when tort reform did not produce the rate rollbacks anticipated. The rhetoric is high, and everyone loses, companies, agents, and consumers, when a market is not healthy. In this environment, the market cannot and will not "right itself" from the blows it was dealt in the 2004 and 2005 seven storm seasons.
I have high hopes that Allstate Agents will be selling new customers again very soon. The IFO will not stand, and the regulatory message has been sent. I am pessimistic about Florida's chances to resolve the overriding hostility that exists between our chief executive officer, the OIR and the insurance industry. Worse, convincing health insurers, homeowner's insurers, or other companies to come to Florida to compete, is getting next to impossible. Who would come here in this environment?
FAIFA is meeting with elected officials, and working to help displaced Allstate agents get their market back. The legislature is in committee meetings next week, and the first committee of the new Senate Select Committee will meet. I will keep our members apprised of developments as they unfold.
FAIFA sent the following press release to all media outlets expressing our concerns over the issue.
NEWS FROM THE FLORIDA ASSOCIATION OF INSURANCE AND FINANCIAL ADVISORS
______________________________________________________1836 Hermitage Blvd. Ste 200, Tallahassee, FL 32308 – http://www.faifa.org/
Contact : Bob Lotane – lotane.faifa.org 850-422-1701(o) – 850-544-9446 (c)
FAIFA MEMBERS REGISTER CONCERN OVER INSURANCE DISPUTE
Agents Statewide Are Not Party to Clash, Yet Feel Caught in the Middle
TALLAHASSEE (1/18/2008) – Responding to an outpouring of concern from its member agents, the Florida Association of Insurance and Financial Advisors (FAIFA) today called on Insurance Commissioner Kevin McCarty and the Allstate Insurance Companies to redouble efforts to settle their much publicized dispute that resulted in the company's Certificate of Authority (COA) being suspended. Agents representing numerous companies have called FAIFA's Tallahassee headquarters with concerns that the dispute will result in negative ramifications for Florida's insurance market, that go far beyond just the Allstate insurance companies.
"We are also concerned that the eyes of the international insurance community are on Florida," said FAIFA spokesman Bob Lotane. "We do not want to see the difficult market challenges we face become exponentially worse."
FAIFA agents representing numerous companies, including Allstate, are concerned that the tone set in this matter will spread, and they are caught in the middle working with confused policyholders who have heard multiple messages about who is affected and how. An example of this type of message comes from the COA revocation order which said the Office of Insurance Regulation (Office) could not document Allstate's claims handling procedures and, therefore, protect the public. This could certainly be a cause for concern by both the Office and policyholders.
Yet the 10 Allstate companies only logged 952 consumer service requests in 2007. In fact, since 2003 - which includes the brutal 2004 – 2005 catastrophic hurricane seasons - the state of Florida logged 5,439 consumer requests on the companies, representing a tiny fraction of the hundreds of thousands of policyholders over a five-year period. This, in great part, is testament to the professionalism and dedication of the agents who are not a party to the recent dispute.
Lotane said that many of the agents FAIFA is hearing from are still working on large volumes of calls from policyholders confused about recent changes to the Personal Injury Protection (PIP) law. That policy language shows the coverage being dropped and then added in again only a couple of months later, and many policyholders were unaware that the rapid changes were made to the state's automobile insurance code.
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Florida Association of Insurance and Financial Advsiors 1836 Hermitage Blvd., Ste 200, Tallahassee, FL 32308
Phone 850-422-1701, Fax, 850-422-2762, Email info.faifa.org
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The mission of the Florida Association of Insurance and Financial Advisors is to enhance the careers of our members through advocacy, professional development and adherence to our code of ethics.