Editorial

When the time comes to write this monthly message, the selfish wish for some over-arching crisis or event is strong. However, for good or for bad, the only thing “hot” right now is the weather. Legislators are dispersed to their respective homes, lobbyists are busy checking out the bridal registry for Charlie's and Carole's gifts. Even Insurance Commissioner Kevin McCarty seems to be taking a breather.

To the jaded, all this inactivity is just a sign of trouble ahead — like the duck placidly swimming along, while underneath his legs are furiously churning. What challenges lurk under the water?

Citizens Property Insurance Corporation is still an issue, of course. With 1.3 million policyholders, Citizens remains the elephant in the room. But until the new board is seated (after this issue goes to press), and begins to discuss and vote on how Florida's largest homeowners' insurer will move forward, everything is just speculation. Determined not to repeat the missteps of 2004, when it was universally panned for its claim-handling in that multi-hurricane season, Citizens has spent considerable time and money shoring up its claim processes and operations. It also has worked on its finances. In June, Citizens' financial adviser John Forney, a managing director with Raymond James, said Citizens has more than $20 billion in claim-paying capacity. However, consumers and industry experts remain wary. No less an authority than Insurance Information Institute President Robert Hartwig, CPCU, recently told the Florida Association of Insurance Agents that, “Every residual market has gone broke even without an event.”

Operating on the belief that Florida cannot go it alone on storm damage control, the industry push for a sweeping coastal wind coverage program continues. In mid-July, the Council of Insurance Agents & Brokers, the Independent Insurance Agents & Brokers of America, The Travelers Companies, and Nationwide Insurance Companies joined forces in urging Congress to address the availability and affordability of coastal wind coverage. The coalition's self-named “Four Pillars” solution for windstorm coverage for named events would spread the risk among all affected coastal property owners from Texas to Maine.

Workers' compensation, the perennial whipping boy, is off in a corner keeping its head down after a series of premium rate cuts by the Office of Insurance Regulation. Most stakeholders seem content to let the 2003 reforms continue to evolve. One issue on the radar is the ever-increasing bite that medical costs are taking. NCCI reports that medical costs account for almost 60 percent of today's workers' compensation claim costs. Contrast that with 1987, when those costs represented just 46 percent of all claim costs. Over-utilization is a big culprit here, driven often by fear of litigation later.

With gas prices breaking the $4 threshold and climbing, the cost of auto insurance appears to be a non-issue for consumers. If they are abandoning their cars for public transportation, it is because of the pain at the pump, not the pain in the premiums. PIP is securely back in the “must-have” fold. Although the law was allowed to sunset on October 1st last year, legislators met in special session days later and revised and re-enacted the PIP/no-fault law. It took effect January 1st with hardly a ripple.

Both sides of the MedMal issue have been remarkably quiet.

Chief Financial Officer Alex Sink continues to meet-and-greet various industry groups, mostly to receptive — even admiring — audiences.

For now, we all seem to be enjoying the summer. Of course, if the big one hits, all bets are off.