Newly elected Florida Gov. Rick Scott's theme for his campaign was "Let's get to work!" He is correct. It is time for Florida's policy makers to get to work rebuilding the economy, including insurance markets, one of the critical components. The next several years must be focused on growing the economy, which translates into lowering the unemployment rate and putting Floridians back to work. Florida must assist the business community that is here now to grow and expand, and the state must compete with the other 49 states to attract new employers.

Florida Insurance Council (FIC) members are ready to do their part. To grow the economy, billions of dollars of new insurance capital will be needed. Insurance is the oil that allows Florida's economic engine to function and capital is the lifeblood of insurance.

We must examine current insurance laws and regulations and ask, "What barriers exist that obstruct insurance capital coming to Florida?" These barriers must be removed. We also must ask, "What incentives can Florida establish that send a clear signal to the insurance community throughout the country and world that capital is now welcome?" These incentives must be established.

Major Challenges Ahead

Homeowners' insurance has been getting much of the attention, but every insurance market is part of the foundation for our economy and, unfortunately, we have major challenges across the board.

In health insurance, Florida, like every state, must implement Congress' Affordable Care Act (ACA). To attract health insurers to Florida and encourage increased business by companies already here, we should adopt only those elements absolutely required to be implemented in 2011. This seems an especially appropriate strategy since the new Congress is likely to make significant changes to the federal health-care law.

Life insurers who provide billions of dollars in coverage in our state have a major challenge. FIC and the American Council for Life Insurance are proposing legislation to help deter a growing but abusive practice called stranger-originated life insurance (STOLI). In STOLI schemes, investors entice seniors to take out policies and then profit when they die. In effect, STOLI promotes wagering on human life. Also, STOLI threatens to expose consumers to unexpected taxes, loss of privacy, and inability to obtain life insurance in the future.

Auto insurance rates in Florida are among the highest in the country and are continuing to rise, while insurers are seeing huge losses despite the high rates. The major factor is fraud, including staged accidents and false PIP claims. For the second straight year, FIC has aligned with a coalition of outstanding consumer advocates to push an insurance fraud package, including more effective licensing of PIP clinics.

Property insurance is in crisis mode even though Florida survived the 2010 hurricane season storm-free and has not had a hurricane landfall since Wilma in 2005.

Non-catastrophe cost drivers are major factors in preventing insurers from attracting the capital we desperately need and building appropriate surplus in the years when there are no hurricanes. The most significant is the explosion of sinkhole insurance claims.

As Insurance Commissioner Kevin McCarty reported to the Cabinet in November, insurers will pay $2 billion in sinkhole losses during the period 2006-2010. Yet, only one percent of claims involve what people traditionally think of as a sinkhole — the large hole swallowing a home. Most claims involve minor cracks in driveways and garage walls, and there is no sinkhole. We are developing major sinkhole legislation, including an engineering science-based definition of structural damage from a sinkhole.

Let's Revisit SB 2044

Other cost drivers include unscrupulous public adjusters, questionable hurricane claims four and five years after landfall, unsupported or excessive discounts for hurricane loss mitigation, and elimination of the mandatory holdback in replacement cost coverage. Legislation passed during the 2010 session (SB 2044) attacked many of these problems, but was vetoed by Gov. Charlie Crist. SB 2044 will be a good starting point for leaders during the 2011 session.

Workers' compensation insurance rates will be rising 7.8 percent effective January 1, the first increase since major workers' compensation legislation in 2003 (those reforms produced a cumulative decrease of 64.7 percent). Florida's workers' compensation premiums remain very reasonable for such a large population state, but problems are beginning to appear.

Another unfortunate Crist veto blocked a package developed by the business and insurance communities to halt the practice by some workers' compensation medical providers of "re-packaging" medication and charging exorbitant prices to comp carriers and employers. We encourage the Legislature to revisit this area next spring.

Gov.-elect Scott is correct. Let's get to work. The Florida Insurance Council is ready. As its new president, I certainly am ready, and while FIC is respectful of the challenges, we are not awed by them.

Cecil Pearce is president of the Florida Insurance Council, Inc., the state's largest company trade association, representing 35 insurers groups — consisting of 141 companies — that write over $15.6 billion a year in premium volume and provide all lines of coverage.

Related Story: A Closer Look at SB 2044

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Rick Scott Is Right - Let's Get to Work!

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