When scanning the landscape and wreckage that was 2007, there is only one conclusion to make: Charlie Crist won. Not only did he become elected governor, he won the hearts and minds of Floridians, and using that political capital, he spearheaded the most pro-consumer, anti-industry, legislative agenda in memory. Give the man credit; he held no cards to his vest and did exactly what he said he would do while the industry looked on almost in shock. After the successes of passing major workers' comp and medical malpractice reforms under former Governor Jeb Bush, the industry finally came up against the unmovable object. That is what happens when a true believer rides into town with a 77 percent approval rating. And it is also what happens when the industry tries to convince the public the sky is falling while the sun shone uninterrupted through two hurricane seasons.
And then there was the legislature that, confronted by Crist, jumped on the bandwagon, and made the most drastic changes to the property market that far exceed any market reforms thought possible. Left helpless, the industry tried to end the year by securing at least one victory in the form of ending the state's personal injury protection law. The industry waged a year-long battle to try and convince lawmakers and the public that the system should undergo major reforms or expire. But failing to make its case, combined with a legislature who was breathing easier after an uneventful hurricane season, the industry could do little by watch as the trial bar and health-care providers carried the day.
But the government had its own issues. Insurance Commissioner Kevin McCarty, who has waged an aggressive battle against homeowners' rate filings, has nonetheless probably done more than any regulator in the country to take the case to Congress for the need for a federal solution to catastrophic losses. And Chief Financial Officer Alex Sink started the conversation on the changing climate. All in all, it was a year of gambles, defeats, and few rewards. And one the industry would probably like to forget.
Crist's Crusade
"When these companies threaten us with this, 'We're going to leave the state stuff, we say 'Go ahead,' "we don't need that kind of business operating in Florida." Governor Charlie Crist reacting to the homeowners' insurance warnings about the property reforms.
Crist saying that he is not worried about homeowners having to face the burdens of paying for hurricane losses after the fact if lawmakers can deliver on lower rates now because the state is "already in the insurance business."
"They can't win in the legislature any more, they can't win in the Cabinet any more, so they're going to try the court system." Crist on a decision by the industry to block an emergency order calling for a moratorium on the nonrenewal and cancellation of policies.
Homeowners' Insurance
"The bill is a virtual takeover of the insurance market by the state." William Stander, representing the Property Casualty Insurers Association, on the legislature's decision to make Citizens Property Insurance Corporation a competitive insurer.
"What it comes down to is the state of Florida has turned to Citizens as the salvation to all our problems. I think that is despicable." Steven A. Firestone, president of the Coral Springs-based Firestone Agency of Florida, echoing Stander's remarks.
"At the federal level there is no appetite for something like [Florida's] CAT fund. Too many representatives view it as a bailout for the people of Florida and others who choose to live along the coast." Alex Soto, president of the Miami-based InSource, Inc., president of the Big "I," the national Independent Insurance Agents & Brokers Association, on the possibility of a federal solution to catastrophic losses.
Lacking such a program, Soto said that the feds could do little more than, "fly over in Air Force One and start shoving FMEA money out the door."
"There is a concern about how quickly the Cat Fund can raise the money it needs. Would the Cat Fund run into the same problem after a major hurricane. There always was a concern among some insurers about whether the Cat Fund would have enough money, now there is a lot more concern." Florida Insurance Council Vice President Sam Miller expressing concern over the Florida Hurricane Catastrophe Fund's to raise money in the bond market after lawmakers increased the fund's obligations.
"It's like going to sleep in the park to save on rent," Florida Association of Insurance Agents Vice President Scott Johnson, on the fact that many homeowners don't buy flood insurance to save money.
"We've tried carrots for a long time. It's time to try the stick." Insurance Information Institute President Dr. Robert Hartwig, on the need for a government mandate calling for homeowners in flood zones to purchase flood coverage.
Catastrophic natural disasters, especially the prospect of mega-catastrophes, create risks that simply could destroy an insurance company or potentially the entire industry. This risk of ruin likely will keep the private sector from offering sufficient capacity for entirely rational reasons. No potential rate of return is going to be worth the risk of losing the entire company." Insurance Commissioner Kevin M. McCarty speaking before the Subcommittee on Housing and Community Opportunity of the House Committee on Financial Services on behalf of the NAIC.
Auto PIP
"This was an unusual issue. The average citizen didn't know the issues, didn't care about them, and paid no attention." Paul Jess, general council for the Florida Justice Association, after successfully fighting off attorney-fee changes in the PIP law.
"A survey of out members found that 20 percent of all auto patients have no health insurance of any kind. Someone's going to have to pay. There is no free lunch." FHA Senior Vice President Ralph Gladfelter, saying the sunset of PIP would dump the problem on the health-care industry.
"The speaker stood his ground and was not willing to push for the bill for the sake of avoiding conflict. Unless the system is substantially reformed, no-fault is going away."
William Stander, representing the Property Casualty Insurers Association, on House Speaker Marco Rubio (R-Miami-Dade) blocking a vote on a PIP bill without major reforms.
"This was our best chance to kill no-fault or make serious reforms and the legislature was not willing to get either done," Stander after the legislature caved and moved to reenact PIP with few changes.
Workers' Comp
"Sometimes, the successes are overshadowed by the crises as the next rate cut comes, perhaps its time to unfurl the flags and banners and have everybody line up to take a victory lap. After all, who doesn't like a parade?" Reacting to the ongoing decline in workers' comp rates.
"It is the most negative trend I've ever filed in Florida and the lowest trend I've ever made in my career." NCCI Actuary Tony DiDonato on the indemnity trend in the association's proposed 16.5 percent rate decrease.
"Trust us: we like paying less money. But if we see more claims, the rate cuts could come to haunt us and we don't want to see you come back in a couple of years and have to raise rates." Billy Cone, president of the Florida Roofing, Sheet Metal, and Air Conditioning Contractors Association, sounding a rare note of caution, even as the roofers are paying the lowest rates in 25 years.
"People thought we were dead three or four years ago. Now we represent $17 billion in payroll and nearly $1 billion in premiums, which is around one-quarter of the total workers' compensation premium base." Paul Hughes, CEO of the Orlando-based Risk Transfer Holdings, on the rebound of the Professional Employment Organization market.
Medical Malpractice
"The bare doctor movement has leveled off and some bare doctors are starting to call to inquire about prices. Many more doctors are waiting for prices to come down further." Nicole Denmon, marketing manager for Jacksonville-based Healthcare Underwriters Group of Florida, on the return of the medmal market.
"We are very pleased with our results for the quarter, which reflect the strength of our company." John R. Byers, President and Chief Executive Officer of the FPIC's, on the company's financial improvement.
Regulations
"The most terrifying words in the English language are: I'm from the government and I'm here to help." Former President Ronald Reagan's maxim on the government's role in regulated industries.
"We have no argument with regulations that keep workers healthier and safer. We just want legislators and regulators to ask themselves: 'Do these rules always have to be so complex?'" Milan P. Yager, executive vice president of the National Association of Professional Employer Organizations (NAPEO), on the increasing amount of regulations at the state and national level.
"So while a large business might commit five employees to meeting this challenge, these five employees represent only a small portion of the company's overall workforce and available resources. For a small business, however, five employees may represent one-quarter of its workforce." Dale Hageman, CEO/president of Accord Human Resources, Inc., on the 787 rules in the federal regulatory pipeline that could impact small businesses.
Health Insurance
"We wanted it to be clean, and have a warm inviting atmosphere." Jon Urbanek, vice president of sales operations for Blue Cross and Blue Shield of Florida, on the carrier's decision to open stores in retail shopping mall.
"I can't help but think there's something wrong when the idea of health reform generates more attention from Hollywood than from our politicians in Tallahassee or Washington. But with this summer's release of Michael Moores' Sicko that's certainly the case." Florida Underwriter contributing editor Phil Galewitz on reviewing Sicko.
"Even the term 'mandated benefits', sounds egregious. We clearly have a lot of them, but we don't know what they cost," Insurance Commissioner Kevin McCarty on the industry's continuing call for fewer mandates.
"I can't think of anything more useless." A clearly frustrated McCarty's reaction to a member of the Florida Health Insurance Advisory Board's call for the state legislature to approve a resolution calling on Congress to tackle health-care reform.
"Add in the fact that more young people are suffering from conditions like obesity and diabetes, and this leads us to expect incidence rates to continue to rise for this age group," said John Noble, director of long-term care products for UnumProvident, on the changing profile in the long-term care market. The company holds nearly 80 percent of the group's long term-care insurance policies in the United States and more than half of claims last year were for people under 65.
Notes and Quotes
"Looking like he is still around his fighting weight of 150 to 160 pounds, he is a smaller man than one might think and I have to believe that somewhere in the audience at least one man was sizing him up and thinking,'I could take him,'" On boxing great Sugar Ray Leonard's appearance at the FAIA convention.
"It was a case of should we or shouldn't we. If we make the wrong decision, we have to live with it for the next four or eight years." FAIA President Earl Horton on the association's decision to back CFO Alex Sink in the 2006 election. Horton added that it was the right choice and praised Sink for her support in agents' issues.
"You have to show up. You can sit on the sidelines and watch the game or get in and play." Horton on the importance of agents to become involved and move forward FAIA's agenda.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.