Fla. Home Insurance Rates Must Rise: Safeco Exec

His comments came during the Independent Insurance Agents & Brokers of America's Young Agents conference at Walt Disney World Swan and Dolphin. He was one of five speakers who discussed their views of the market in a panel discussion.

When it comes to pricing homeowners insurance, he said, "We, as an industry, have failed to solve that problem. We have mismanaged that issue as an industry."

Mr. LaRocco said while insurers have gone back and looked at their underwriting, there are still some areas where additional rate increases will be necessary.

The four hurricanes to strike Florida this year were unprecedented, he said, and in light of the situation, Safeco has decided to wave the second deductible. However, the risk from hurricanes needs to be looked at more closely and that will probably mean additional increases.

Dan Carmichael, president and chief executive officer for Ohio Casualty Group, based in Fairfield, Ohio, said only recently have insurers brought homeowners insurance to a state where there is adequate underwriting. The challenge with underwriting in Florida is that the entire state is exposed to hurricanes and should be considered a coastal risk.

Despite some solvency concerns, Doug Wendt, president of Encompass Insurance and Deerbrook Insurance, the independent agent arm of Allstate Insurance Company headquartered in Northbrook, Ill., said that when it comes to exposure, no one could have predicted the number of hurricanes that have crossed the state's path, and the state's risk pool system appears to have done its job.

Mr. Carmichael said that as far as carrier's exposure, the industry does appear to be better positioned. He noted one analyst's comments that even though the natural catastrophe season could prove to be more expensive than 1992 with Andrew and other storms, the impact to underwriter's surplus would be four percent less.

The net effect to the London reinsurance market, he continued, will not be concern with company's current financial state, but their exposure to future disasters, especially earthquakes.

On general questions about pricing trends and the impact of that on clients, the executives said that technology will help stabilize the market, as carriers work to segment their risks and underwrite them adequately.

However, Bob Williams, group president of the agency business for Mayfield Village, Ohio-based Progressive, said the industry does have an image problem, one which comes largely from the education consumers have received that their primary concern for insurance should be price.

Mr. Williams said agents need to work harder at marketing and educating the consumer that there is more to buying insurance than price and make the audience more receptive to that value proposition.

Louise "BeBe" Canter, outgoing president of the IIABA, senior vice president of Patterson-Smith Associates in Falls Church, Va., said that since 9/11 there has been a shift in the value people place on insurance and people understand its importance to them in their lives.

"The business we are in is providing service to people," she said.