For the insurance industry in Florida, the goal for 2006 will be helping state lawmakers walk the fine line between doing too much and doing too little to help the state recover from its second straight year of major hurricane losses.

For insurers, the biggest question revolves around “whether or not the legislature is going to commit itself to an energetic private market, or whether it will commit to an increasingly subsidized public market,” according to William Stander, regional manager for the Property and Casualty Insurers Association of America. “We hope for the former.”

Many of the problems facing the property insurance market, explained Julie Pulliam, a representative for the American Insurance Association, stem from the reaction of lawmakers to the series of major hurricanes that buffeted the state in 2004, which “resulted in the legislature passing a law that put a lot of mandates and requirements on the industry.”

While these requirements have been a problem, Ms. Pulliam said they seem to be part of what is becoming a steady diet of changes to insurance rules out of Tallahassee. “We don't need that,” she said. “The constant changing of the rules on an annual basis is not helpful. We're urging the legislature to fight the urge to pass bills that impose new burdens on the insurance industry.”

As result of the legislature's actions, Ms. Pulliam said, lawmakers have created a new problem for themselves and the people of Florida. The state's insurer of last resort–Citizen's Property Insurance Corp.–has grown beyond its intent and could become a financial problem for the state, she contends. “The legislature is very concerned about Citizen's and the fact that they are taking on so many policies and debt,” she noted.

Among the proposed solutions, she said, would be to increase policyholder responsibility for Citizen's through such means as increased deductibles and less favorable policy terms for second homes. Such proposals, she added, would force policyholders to “put a little more skin in the game,” rather than simply relying on Citizen's and the state for coverage.

For other property insurers, however, Ms. Pulliam said the industry would seek to be allowed to manage itself, by seeking the repeal of recent laws imposing requirements and restrictions on coverage. “Companies need to be able to price their products to match the risk,” she said. “That's not happening in Florida.”

Special Reports /

Florida Property Insurers Resist New Legislative Burdens

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