Reality Check

There I was, being driven in a plush limo from the airport to the exclusive Boca Raton Resort & Club, invited to make a speech on the industry's image and its impact on the bottom line before a group of insurance company financial types, when the driver, after asking why I was in town, went on to pour his heart out about how the cost of insurance is ruining his life.

The driver shared his tale of woe while he drove me to the fancy hotel where I was to address the Society of Insurance Financial Management. He said insurance was forcing him to sell his family's “nest egg”–a rental property mainly visited by tourists–because he could no longer afford the price of coverage. Many of his friends, he said, might even have to give up their primary residences, because insurance was costing more than the mortgage.

He also noted that here he was, working on a Sunday–normally his day off–to help pay for his soaring insurance bills.

He asked me if I thought Congress would “bail us out” by establishing a federal catastrophe fund. I told him frankly I had my doubts, mainly because people off the coasts don't want to be stuck with the tab for those crazy enough to live in a hurricane zone.

“But they have to pay anyway,” he ventured, citing “all the money FEMA ends up spending down here” after a disaster. “I'll pay for the federal coverage,” he added, “if they would just offer it. We just need someone to cover us.”

I brought up the reforms Florida passed in terms of establishing a statewide cat reinsurance fund, which should have offered some rate relief in the short-term, but leave residents badly exposed in the long-run if another Andrew or Katrina hits, say, Miami. He seemed clueless about his own state's efforts.

“We know insurance isn't a non-profit industry, and it isn't a charity,” he conceded, “but when something happens, we need them to pay,” grumbling about how long friends, family and neighbors had to wait for claims checks after the storms that hit Florida a few years ago.

“We also need coverage at a reasonable price,” he said, complaining about “profiteering,” as carriers “cash in” with big premium hikes, even after two years of no major storm activity.

He grunted when I suggested that insurers might need to refuel their tanks after spending so much to cover the grand slam of hurricanes in 2004 and Katrina in 2005.

“You guys don't look like you're doing too badly,” he grinned, as he helped me out of the limo in front of the plush resort. “Tell your friends we need affordable insurance down here.”

This is the perception insurers are up against, and perception is reality when it comes to dealing with the fallout politically. People vaguely understand that insurance isn't free, but they are convinced carriers are flush with cash that is rightfully theirs. Claims are never paid quickly enough, and prices are always too high.

How do you counter such a public mindset, which spills over into the political arena? I'll talk more about that in coming blogs, but am curious to hear your feedback.