May 2011

Tornados, Floods, Earthquakes and now Hurricane season  is getting under way and expected to be a wild one. Losses this year could be as much as 10 billion or more compared to 2-4 billion avearge in prior years. Guess what this means to us, yes higher premiums!!!! No one really seems to care when the Insurance carriers loose money, but everyone cares when their rates go up 20-40% and will continue like this for 1-2 more years or more. There is no sympathy for Insurance companies when they lose money, but it is a fact and will have to be dealt with. Please call L & S Insurance for all of your Home, Auto,Life, Flood and business policies. Please read the full article below;


Predictions are not good and because this season is La Nina the predictions are worse and not very predeictable. El Nino  last year had a lot of wind shear so although we had 19 storms develop none were ever really a true concern for the United States as we were missed. This may not be the case this year and since Hurricane season is  almost under way, we can only wait and see. I believe all eyes in Tallahassee will also be on the season as the new bill signed into law by the Governor and passed by the Legislators in Tall coud live or die based on what happens. Home Insurance rates are already getting out of control, but what if a hurricane hits, who will be left to afford the Insurance here in Florida? Please enjoy the article by Pamela Rush and please call L & S for all your Home, auto Commercial, Flood and Life Insurance quotes.

The deadline for old claims has been 5 years and thousands of last minute claims from Hurricane Wilma came in very last minute by a lot of Public Adjustors! Now that the new bill has been signed into law and the new time frame is 3 years, all of these claims will now be reviewed to see if the claims will be settled or not.   Governor Rick Gcott  has tried to keep the fraudulent claims from getting paid in the future, but it seems like The Cat fund which is our tax payer fund now as well, is going to review these claims very carefully and soon. CFO Atwater will also be part of this investigation to determine Fraudulent claims and valid ones.Please be ready for Hurricane season as 6/1 is close and be sure your premiums are paid timely as there is no grace period on property Insurance. Please read the full article below and please call L & S Insurance for all of your Home, Auto, Flood and commercial quotes.

Well the bill  is now Law as Governor Rick Scott signed it in Tallahassee  on 5/17  days early of his  5/26 deadline.Even though Senator Fasano a fellow Republican  has been saying that this is not good for the  Home owner’s in Florida as it can increase rates 15% or more every year.He has also said this goes against the Governor’s promise not to raise taxes and he feels this is doing that through the back door of the Big Insurance companies. This is definitely  a win for big Insurance and the companies will definitely become healthier the real question are the current  rates from Citizens Insurance. Today, the rates are very competitive and people are choosing them and this will get worse if the rates for Citizens do not become much higher and very quickly.The Citizens bill did not pass yet so I believe there will be a special session over the summer for at least this reason. This will not help the people struggling to make ends meat while paying $100 or $200 more / month just for Insurance on their home.This bill will affect Public adjustors and their ability to help clients and also will dictate who will be able to file the claim first. The bill does focus a  lot on Claims and speifically sinkhole claims. It will be more dificult to get paid and to even file a claim and if you do have a sinkhole you may not be able to collect on Coverage B appertanent structures and other areas.  This will be better for Insurance agencies like L & S as higher premiums generate more revenue which has been tough over the last 3-5  years, but the Real estate world will have a huge negative impact and this could truly slow the Florida economy, but no one else seems to be talking about this like I have. Please read the full article as it is a big one and please call L & S for all of your Home, Auto, flood, business  and Life Insurance quotes.

Senator Fasano  who was part of this bill is now saying this goes against The Governor’s promise to not raise taxes.This bill is a mess that was passed by our Legislator’s in Tall and it was rushed as well because they assumed this would be signed into Law quickly. Now come the delay’s and isn’t this what Governor Christ also did last year and then finally vetoed the bill. Nothing is really resolved w/ this until the Citizens Insurance Bill is passed and signed as well. Citizens Insurance must become the Insurer of last resort w/ the highest prices or everyone will be in Citizens by next year. The goal is to reduce Citizens into the private marketplace because Insurer’s will have rates they can live with and come back to Florida. Citizens is a bargain this year in many cases and it will continue to grow from the nearly 1.4 Million and not decrease like our Governor really wants.Everyone else has raised rates 30% or more in S. Florida, the people are upset and Citizens  has some of the  lowest rates for so many people it is no wonder thay are choosing it already.On top of all this Re-insurance and the Japan crisis are also going to affect Florida insurance issues as well. Hurricane season is now only 3 weeks away or less and based on what the world has seen of late we all need some luck for this season. please read the fulla rticle by Julie Patel of the Sun Sentinal and please call L & S Insurance for all your Home, Auto, Flood, commercial and Life Insurance needs.

The Mighty Mississippi made this decision all to easy for all of our Legislators in Washington in relatioon to the 19 billion dollar deficit for FEMA. Guess what?? Prices will increase for some time till the shortfall is covered. Please call us at L & S Insurance for all your flood, Home and Auto Insurance and please read up on the new flood bill and what will be covered.

An article by Julie Patel of the Sun Sentinal on the reality of Home Insurance in Florida. 15% / year increase will allow Insurance to double in 5 years and who can afford that or why would people move to Florida knowing this. This is what Governor Rick Scott asked for in his campaign and this is what the Legislator’s in Tall approved last weekend. Now it will be passed into Law in a few weeks. Soon the Citizens Insurance bill will also pass and be signed and 2012 should have some of the highest Insurance rates ever in Florida. They say, that in time, competition will happen w/ higher premiums and some big Companies like State Farm, Allstate and other’s come back to the Florida marketplace. This may happen, but I am doubtfull and this will not be a good solution for Floridians, but great for the Big Insurance carriers. Please read the article by Julie Patel below and remember to contact us at L & S Insurance on this Blog page for Home, Auto and all Insurance quotes.

Citizens Insurance or as our new Givernor Rick Scott says” The Florida taxpayer’s Insurance” is now spending 400 million on re-insurance on the 3% chance it actually needs it. To go along w/ this the Citzens board based on a recomendation from the Florida CFO and the Insurance commissioner Kevin McCarty have all agreed this is a necessary expense for the Florida cat-fund as well.This will total about 850 million overall and how will this get paid. It looks like the new premium increase yet to be determined will be affected by this. Citizens has never purchased Re-insurance, but w/ the pending Hurricane season just around the corner and the funds not in good shape this was a necessary evil. All other carriers do carry re-insurance and the cost is also passed on, but this is why Citizens Insurance has been so competitive, but times are changing. Please read the full article below and remember to call L & S Insurance for all your Insurance needs.

  This Blog below is from Jeff Grady of the FAIA(Florida Association of Independent agents). Jeff talks about my comments which are how can property Insurance reform happen if the Citizens Insurance bill did  not pass? The entire objective was to eliminate Citizens Insurance in 4 years and to bring more Home Insurance carriers to Florida.State Farm, All State, Nationwide and many other’s will not return until Citizens is priced as the last and highest insurer. Citizens needs to be priced to be on the high side and not competitive.Our legislators are applauding what they did, but in Tallahassee all they did is like usual, create a bad situation by not doing al that needs to get done.  How can this happen if Citizens is not only competitive, but very resonable now. With rates only scheduled to increase 10% next year, and other  carriers are at 30% or so, everyone will want to go to Citizens and the 1.4 million policy holder’s in Citizens will not shrink, but grow substantially.Please read jeff grady’s Blog and remember to call L & S Insurance for alll your Home Insurance and auto Insurance quotes as well. Please contact us on this blog Page;



Property Insurance Reform…Where You Stand Depends on Where You Sit.

Posted by Jeff Grady on May 10th, 2011 8:51am

Whew!  The session is finally over and many ideas, good and bad, have effectively been laid to waste.  One that now resides in the proverbial scrap pile is a Citizens reform bill that FAIA continues to believe is essential to accomplishing comprehensive property market reform in Florida.  While agents and the industry should rejoice over the passage of SB 408, it is my view that only half of what was sorely needed actually got done. 

Remember, the goal proclaimed by most policymakers and industry insiders was to restore fiscal health and stability to the private market AND attract new capital to Florida by diminishing the super-competitive stance of Citizens.  Mission accomplished on the first part:  SB 408 is indeed a much stronger version of the two previously vetoed property reform bills and will undoubtedly go a long way toward curing Florida’s newfound sinkhole epidemic that has effectively raided carriers’ claims paying capacity for future storms.  Further, the bill tries to make Florida more like the rule rather than constantly being the exception.  Restoring the RCV holdback provision, reducing the 5 year claims filing window, providing for expedited rate filings to recoup reinsurance costs, etc., represent a good start to making our property insurance market a more sensible place for insurers to do business.  As an added bonus, the FAIA drafted language to exclude agent commissions (acquisition costs) from overzealous regulation also passed as part of SB 408.  No longer will the regulator be able to “directly or indirectly” dictate what a company can pay its agents…not necessarily a problem that exists today, but definitely a solution that should prevent such from occuring again.   

So what about the second part:  Citizens reform?  While FAIA lobbyists were able to assist in the exportation of a few significant provisions from the Citizen’s bill and successfully amend them to SB 408, the truth is the most meaningful language regarding rates and coverage was scrapped and left for another Legislature to tackle.  I believe this adverse development leaves the stated policy goals for property insurance reform unfulfilled.  Said another way, how can Florida expect to attract new capital to its residential homeowners market when the state’s own insurer represents such fierce competition?  How will private companies realistically be able to remove material numbers of Citizens’ approximately 1.4 million policies when every insurance expert (including Citizen own actuaries) publicly acknowledges the company’s rate inadequacy of 40-50%?  Remember, Citizens policyholders have the right to decline a take-out offer.  Couple that with the memory of a horribly failed regulatory experiment which required take-out companies to maintain Citizens rates for up to three years after removal, and the task of depopulating the state-sponsored insurer via new capital formation looks daunting. 

In the meantime, Florida’s homeowners market is going through a reinsurance transformation that once again, will make Citizens a competitor like no other.  Two things are primarily responsible for this recent change:  capacity constraints stemming from Japan’s Earthquake/Tsunami and the new RMS Catastrophe Model which projects much higher potential losses to Florida’s inland counties from hurricanes.  Bottom line…reinsurance rates are headed higher and it will likely take more of it to cover the same portfolio, particularly for those companies that have seemingly done the right thing and balanced their coastal exposure with business from inland parts of our state.  Realize, the use of the RMS model is largely dictated by the reinsurance industry when they offer terms to private insurers.  While Florida’s Hurricane Methodolgy Commission has yet to approve the use of the new RMS model when companies are seeking rate changes, the reinsurance world doesn’t necessarily revolve around Florida…rating agencies also have a very big say here.  Thus, several carriers are already pricing for these factors and setting their rates accordingly.  That fact is evidenced by a bevy of recent announcements from property insurers that limit capacity in inland counties, while also increasing rates for those risks.

Now, consider this…Citizens will experience practically none of the aforementioned problem.  Why?  Because it isn’t required to purchase reinsurance!  Yes, there is indeed another proposal on the table for Citizens to possibly acquire reinsurance for the 2011 storm season.  But (and it’s a big “but”), the proposed coverage is only for the HRA account and would only change Citizens’ storm worthiness to be able to cover the 1 in 34 year event.  This is only a slight increase from its current capability of covering the 1 in 32 year event.  Said another way, the Citizens reinsurance proposal would cost $107 million to provide only $500 million in coverage, and there is no provision for a second event.  This hardly moves the needle in terms of squaring the reinsurance concerns of the private market with those of Citizens.  Thus the “super-competitor” lives on and makes the idea of new capital formation around Citizens takeouts look doubtful.

With all of that said, there is one more noteworthy deterrent to returning Citizens to its original purpose of a residual property market.  That one can best be seen by looking at the constituency Citizens has effectively gained over the years by offering a public subsidy.  Noticeable in that group are consumer groups like FIRM (Fair Insurance Rates for Monroe County), legislators from coastal or sinkhole prone areas, and finally, agents who never wrote a property policy prior to gaining an appointment with Citizens.  Indeed, the appeal of government subsidized insurance is a powerful elixir.  These groups are organized and fight hard for Citizens’ right to exist in its current form.  In doing so, they seem only so happy to burden Florida’s taxpayers with the real cost of the insurance they buy or sell…an eventuality sure to come again without a significant change in course. 

So, what this all means is there is still much work to do to restore Florida’s property market.  This is not to suggest that Citizens should go away.  I do not believe that is possible, as there will always be some portion of our state’s catastrophic wind exposure that private insurers will simply leave uncovered.  But, that fact in no way justifies the footprint Citizens currently lays down in our marketplace.  It’s irresponsible, it could be very costly in the future and thus, I remain faithful that a comprehensive bill to reform Citizens will ultimately occur.      





Jeffrey W. Grady


Florida Association of Insurance Agents

850-893-4155 ext. 379

850-668-2852 (fax)

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Everything I have been blogging about is here except for the Increases In Citizens Insurance. That  was a seperate bill that is not yet passed by our Legislators in Tallahassee ,but is crucial for the success they want and expect. I personally have no idea how all of this will work if Citizens is only increasing at 10% statewide and everyone else is increasing at 30% or more. Citizens will be the cheapest by next year and everyone will go there no matter what? Is this what Governor Rick Scott really wanted. I thought he wanted to get rid of Citizens and he even is having it renamed to ” The Florida  Taxpayer Insurance association”. I guess he wants all Floridians insured by the State which is so opposite of what he campaigned for and was elected for. As for the rest, Public Adjustors will be looking for new jobs and claim payouts will be harder to collect on as well as Sink Hole definitions, coverages and prices are all up for grabs. It will take a while for all of this to sink in and everyone will now be looking for opportunities as usual.Everyone seems happy a bill was passed even the CFO and Insurance commissioner as well. They all applauded the bill being passed in both houses easily and ready to be signed by our Governor. In the meantime, please read the new bill and please call us at L & S Insurance for all of your Home, Auto and Flood quotes. Please remember that Hurricane season is just around the corner so be ready and shop early.

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