A View From the Insurance Office -- '76-'89

My congratulations to National Underwriter and Florida Underwriter on this 25th anniversary issue. I have had continuous involvement with Florida's insurance scene and with the national scene for more than four decades, and I have always relied on the Florida and National Underwriter magazines for their professional and analytical approach in reporting each insurance crisis and issue of the day.

Many may not have known that when I began my career over 40 years ago, I was a State Farm agent in Orlando. How ironic that today I am a part of an independent agency at a time when many State Farm agents are considering a similar move, but for entirely different reasons. To me, the starkest comparison of today's environment to the one that existed when I was Florida's Commissioner can be found in the still unfolding saga of State Farm. Frankly, the "good neighbor" company was revered throughout Florida and the nation for its competitiveness and efficiency. I could not have imagined any circumstances that would lead to it pulling completely out of Florida's property market, much less circumstances that would lead its highly successful sales force to consider becoming independent agents.

During the time I served as Florida's Insurance Commissioner, the crises we faced were much different than those of today. However, like the regulatory issues facing State Farm now, they were equally challenging.

Our Sunset Challenge

Perhaps the most frustrating was the newly enacted Sunset Law of the early 1980s. It caused the review and rewrite of the entire state insurance code as a means to "cleanse" the statutes of unnecessary regulation. Sounds like a wonderful concept; however, the insurance code is the largest single section of Florida law — bigger even than the banking code or the criminal statutes. Under "sunset," a massive body of regulatory law would cease to exist if not affirmatively re-enacted by the Legislature.

As insurance commissioner, I was responsible for the revision and promulgation of the rules pertaining to both the expiring laws under sunset and any newly enacted or amended laws after sunset. The challenge flowed from the fact that many of the traditional, and sometimes parochial statutes, would be open for pot shots from any and all sides — at the same time! That prospect was unprecedented in Florida legislative history.

Confirming my worst fears, trial lawyers began fighting to repeal Florida's no-fault auto insurance law; banks were fighting to eliminate the prohibition against their selling insurance; and the laws relating to the funding, purpose, and operation of the Department of Insurance (OIR's predecessor), for which I was responsible, were also under attack from insurers convinced that many of their burdens could be relieved by curtailing the commissioner's ability to oversee their operations.

Today, as an officer of the Florida Association of Insurance Agents (FAIA), I have an entirely different perspective and appreciation for the burdens industry lobbyists must have faced under the sunset of the Insurance Code. After all, each section of the Unfair Trade Practices Act was studied and dissected by lawmakers totally unfamiliar with its intent and application. Imagine today's lawmakers debating in numerous committee hearings and on the floors of each legislative chamber issues such as the anti-rebating statute, the Florida Insurance Guaranty Association, the auto JUA, agent brokering, agent sharing of commissions, agent and agency licensing, the exchange of business statute, unfair inducements to purchase, prohibitions against free insurance, and the propriety and desirability of allowing non-admitted insurers to do business in Florida.

Now imagine that debate and dissection of each of these topics occurring simultaneously. That was sunset! Never has there been such an assault on so many insurance laws as there was during the first full sunset of the Insurance Code in 1982 and 1983. In the end, it was comforting to see all the diverging interests come together, realizing that, as difficult as things were, they could be a whole lot worse if the Insurance Code were to entirely sunset. My earnest prayer is that Florida's Legislature, the industry, and insurance regulators never have to go through that process again.

Although sunset did not affect the provisions of Chapter 440, workers' compensation was, like today, also in need of reform. As commissioner, I joined with FAIA and other business organizations in implementing the wage-loss concept. In the end, wage loss took Florida from being a state with arguably the highest premiums and the lowest benefits to a state with the lowest premiums and benefits comparable to those of the most liberal jurisdictions. Of course, the concept of wage loss and other reforms from the early 1980s eroded until the workers' compensation system was, once again, in need of overhaul. By 2003, I was no longer the commissioner, but as an independent agent I was involved through FAIA with the reforms necessary to reduce workers' compensation premiums by almost 60 percent over the last four-and-a-half years.

The Liability Market Collapse

One other issue that comes to mind from my 12-year tenure as insurance commissioner was the collapse of Florida's liability market. In the mid 1980s, rates were soaring, lawsuits were rising, and payouts were at record highs. Litigation concepts and terms such as prevailing party attorney fees, bifurcation of trials, non-joinder, collateral sources, and joint and several liability were beginning to pierce the threshold of public consciousness.

Meanwhile, insurance companies were abandoning Florida, and the liability crisis was impacting nursing homes, closing day-care centers, and affecting other high-profile professions and businesses. The crowning blow was when Florida's only remaining medical malpractice carrier announced it was leaving the state. In fact, it was the cresting of the liability crisis that led to the passage of an excess profits law, the creation of the first Market Assistance Plan, the establishment of an industry trade group called the Florida Insurance News Service, alternative insurance mechanisms such as reciprocal insurers and the Florida medical malpractice JUA, and numerous laws regarding attorney fees, lawsuits, and the settlement practices of insurers. During the liability crisis of the mid 80s, Florida achieved national recognition as a bell-weather state for insurance reform.

There were, however, negative reverberations. Nationally televised press conferences and attempts to gain "media spin advantages" were quite common; national consumer advocates Ralph Nader and Bob Hunter both saw to that. They were in Florida frequently, testifying before legislative committees and contributing to the building of the worst insurance industry public image it had ever experienced. Frankly, that poor public perception lasted until the industry's sterling performance in the aftermath of Hurricane Andrew in August 1992. I'm sorry to say that today, thanks to some of the same consumer advocates and the politics of some elected officials and, perhaps the poor behavior of a few industry players, the insurance industry's image is once again at record low ebb.

One thing Florida's insurance commissioners have all come to know is that the nature of insurance is catastrophe and crisis-oriented. As an industry, insurance is either in crisis, just leaving a crisis, or on its way to a crisis. That is, after all, what gave rise to the existence of our industry and profession in the first place. If lawmakers and the public could keep in mind that each crisis is a reflection of society's ills or the inability of government to resolve its own deficiencies, our image and our ability to absorb the risks of America's and Florida's economic system would be markedly improved. In no small measure, Florida Underwriter magazine has been instrumental in bringing that message home.

Happy Birthday, Florida Underwriter.

Bill Gunter was elected to the Florida Senate in 1966, serving until 1972 when he was elected to the U.S. House of Representatives, where he served until 1975. He was then elected Florida's insurance commissioner, serving in that capacity from November 1976 until January 1989. In 1983, his peers elected him president of the National Association of Insurance Commissioners. He was named the "Most Effective Insurance Commissioner in the United States" by the National Insurance Consumers Organization in 1988. He also served as president of the National Association of State Treasurers in 1981, and received the group's Treasurer Emeritus award in recognition of his accomplishments. The University of Florida elected him to its Hall of Fame in 1956 and awarded him the Stephen C. O'Connell Distinguished Service Award in 2004. He is currently chairman of the board of Rogers, Gunter, Vaughn Insurance, Inc., a Tallahassee-based independent insurance agency, and chairman-elect of the Florida Association of Insurance Agents.