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Why are Florida home insurance companies going broke in non-hurricane years?

Tim Shaw, CIC

You should, be prepared for the coming increase in Homeowners Insurance and the timing couldn't be worse.  With double digit unemployment and record foreclosures, this is not good news for our clients but more importantly, it's also not a time to be price shopping. Now is the  time to VALUE shop! (read the links below).  We can't ignore the facts.

There have been four companies in the past year that have been liquidated or are in the process of liquidating with more to come. These companies are the end result of a legislative body out of control.

There are plenty of arguments that admittedly I am unable to successfully debate on behalf of the insurance industry. Those would be, that they make too much profit and they are too greedy. However, I can debate reality.. and the reality is "ALL" of the well financed competition has already left the building! All the good companies, (Travelers, Hartford, Allstate, State Farm, Safeco, Auto Owners etc.) have left the Florida property insurance marketplace or are in the process of doing so. Why? Well you have to ask yourself, if there were profits to be had in Florida, don't you think greed would keep them here or at least bring them back?  I mean, look, they are still in Ohio and Indiana and their homeowner rates there are still $400 to $800.

My honest opinion after 36 years of writing home insurance here in Fort Myers and Naples is that our legislative process ruled by power hungry politicians is the enemy to a stable, competitive system that if in place would allow the free enterprise system to work and level pricing off to the lowest possible denominator allowing carriers a 5 to 10% profit. Our elected politicians playing politics have actually run off the "for profit" companies and left all of us here in sunny Florida with underfunded, under capitalized, small take out companies and of course our over bloated, overexposed and fiscally broke State created Citizens.

Our country has always promoted competition and free enterprise as a catalyst to drive prices lower in a free market. Anytime a company can cut costs and sell their product for less, is always good for the consumer...  Wal-Mart is the best possible example of this.  Allowing the government to control this process is a recipe for chaos and disaster (in my opinion).

You should, ask yourself, if you were in charge of bringing a return on investment to your stockholders and you were in a market that politics controlled to keep you from expecting a positive investment return, how long would you have a job if you refused to accept the obvious and move out of that market?  Florida does have an excess profits law that requires all insurance companies to return any profit over 10%, totally ignored by our Florida politicians.

There you have it, my opinion which you may feel free to disagree with.

More importantly here is my advice about how you should deal with this.

First of all, please know that I represent 23 of the 29 companies actively writing new business in Fort Myers, Naples and Charlotte. We are able to shop your renewal with all 23 of these companies...  They are the same companies that all of our competition represents as well. That said if you are already a client of our agency, we already have your information necessary to go to quote, (Wind Mitigation, Social Security number, etc). No need for you to give that information again to a stranger.

You should also be aware there are several agents out there that will intentionally low quote you knowing full well that you will eventually get an additional premium notice... Although you might be angry initially, they have you and they know most of you will have forgotten that anger by next year's renewal. We never have nor ever will play that game.  

Since we refuse to practice unethical marketing, we do miss writing a good amount of new business. Please be cautioned that this practice is rampant. Another practice to be aware of out there is to intentionally leave off certain coverage's that will lower your costs without you being made aware of those reductions. 

After reading the arfticles from the links below, you will understand that now is not the time to be price shopping. Now is the time to be value shopping.

I appreciate your business and am available to discuss this further if you would like. below are a couple of links for those that would like to know more.

http://ezinearticles.com/?Florida-Home-Insurance-Companies-Losing-Money-in-Good-Weather&id=3645711

http://www.insurancejournal.com/news/southeast/2010/03/10/108007.htm

http://www.theledger.com/article/20100227/news/2275050?p=7&tc=pg

http://www.heraldtribune.com/article/20100318/LETTERS/100319698

http://www.heraldtribune.com/article/20100307/OPINION/3071020?p=2&tc=pg

Tim Shaw, CIC
Tim Shaw Insurance Group, Inc.
"Protection For Life"

(800) 711-3305 ext 9700
www.timshaw.com
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