News Detail
Pennington shareholder, Mark K. Delegal joins lawmakers and other insurance industry representatives to speak to the Greater Naples Chamber of Commerce about Florida's Insurance crisis.
(09/19/2008, Naples Daily News )
Hurricanes won't go away but insurance companies that shoulder risk for the damage they can cause wondered Tuesday how they'll weather an ongoing storm.
Industry types gathered for a Greater Naples Chamber of Commerce talk on Florida's insurance crisis, which dates back more than 15 years to Hurricane Andrew, according to moderator Brian Glaeser, who owns a State Farm office in Naples.
He said the ever-present crisis is availability and affordability of insurance. And the group spent the better part of two hours discussing several factors that have destabilized those two things.
We were just trying to educate the public that there's a huge amount of risk in the state of Florida and we're at risk of being underfunded to cover the (next big) hurricane, he said.
Florida has $2 trillion of property exposure in coastal areas and there has to be a way to fund them, Glaeser said.
One thorn in the side of some agents at the meeting was legislation signed into law in January 2007 and supported by state Rep. Ron Reagan, R-Bradenton, who spoke at the Chamber's symposium.
Responding to Floridians seeking relief from skyrocketing insurance costs, this legislation led to rate freezes and increased discounts for those who retrofitted their property to meet wind codes. Reagan said he opposed the law philosophically but supported it politically.
But that translated to tough times for the insurance business, speakers said.
Florida's Office of Insurance Regulation hasn't granted insurance companies a rate increase in 21 months, Reagan said.
And Citizens Insurance, the state-run insurance company, has not increased prices in two years but has massive exposure to risk with the number of policies it has, Glaeser said.
Scott Newman, director of business development for Lutgert Insurance, said he was glad to hear Reagan tell the group that he is involved in discussions to increase Citizens rates.
Citizens is intended to be the insurer of last resort, not a competitor like it is now, he said.
In the mean time, big insurance companies speculate that some smaller operations may not practice in a financially sound way. Companies may entice customers with low prices yet not be able to pay up when the claims roll in, speakers and audience members said.
Finally, speakers seemed to be in agreement that regulation was holding the industry back from finding solutions to these problems.
Markets work best at solving problems ... instead of regulation, said Mark Delegal, an attorney for Pennington, Moore, Wilkinson, Bell & Dunbar in Tallahassee, whose biggest client is State Farm and also represents the Florida Chamber of Commerce. I have confidence in Wall Street, not withstanding what has happened in the last 48 hours.
The largest U.S. insurer by assets, American International Group, may be on the verge of bankruptcy. This weekend, Lehman Brothers Holdings Inc. filed for bankruptcy protection and Bank of America Corp. bought Merrill Lynch & Co.