McCarty: Despite Risks, Insurers Still Investing In Florida Market

NU Online News Service, June 2, 1:21 p.m. EDT

Florida's insurance commissioner has released a letter detailing how, despite hurricane concerns, carriers are continuing in the state insurance market, raising capital and forming new companies.

The observations from Commissioner Kevin M. McCarty were made in a letter he wrote to state Rep. William L. "Bill" Proctor, R-St. Augustine, in answer to several questions from the lawmaker regarding the state of the property insurance industry.

Mr. McCarty said that after the hurricanes of 2004 and 2005, 54 companies decided to either set-up or expand business in the state to provide commercial or residential property insurance.

"…some investors still view Florida as a place to do business," he said.

The response comes on the heels of a veto by Florida Gov. Charlie Crist of a bill, sponsored by Rep Proctor (HB 1171), that would have permitted some insurers to set unregulated property insurance rates.

Rep. Proctor sent a letter to the commissioner in early June questioning the claims paying ability of the industry and the willingness of insurers to continue to write business in the state.

Commissioner McCarty, who opposed the bill dubbed "Consumer Choice," said that while there is new investment in the state he is under no illusion that it will immediately replace capacity lost with the departure of State Farm, the state's number one insurer after Citizens, the state created insurer of last resort.

"It is not my intention to downplay the serious effects of State Farm's exit from the market and I do not mean to suggest that these new companies formed since 2006 will absorb all of the policies that State Farm plans to cancel," the commissioner said.

Carriers refusing to write coastal are not unique to Florida, the commissioner noted, as many insurers are pulling back providing coverage to such risks from Texas to Maine.

While there is concern for providing insurance for the state's residents, Mr. McCarty pointed out that Citizens probable maximum loss has dropped 17 percent as of Dec. 31, over last year and its policy count is down by 1 million, an indication that consumers can secure coverage from more than 200 carriers who can write business in the state.

He also noted that State Farm is the only national carrier to completely withdraw from the state.

The commissioner said that Mr. Proctor and he have been trading letters on this issue and that he thought it would beneficial to both parties to meet in person.

A spokesman for the department said Rep. Proctor has not yet replied to Mr. McCarty's letter.