Had a far ranging conversation recently with a friend and lobbyist regarding Florida’s domestic property carriers. He asked… “What can we do about agents that keep telling their clients domestic insurer’s are thinly capitalized?”
First, I reminded him that independent agents would never intentionally deride carrier’s in which they’ve placed clients. Makes no sense.
But, here’s the rub.
Citizen’s depopulation efforts, particularly those that attempt to “scare” policyholders into accepting takeout offers, often put agents in the position of defending recommending Citizens in the first place.
State Farm agents, too, are still protecting substantial books of Citizens business. They’re running out of alternatives. While most don’t, many still warn their clients to decline takeout offers from “thinly capitalized start-ups” that have “no history of paying claims after a storm.”
But, blame the takeout process. Don’t blame agents.
Besides, they don’t have to badmouth domestic carriers when the media and Weiss Ratings are doing such a good job.
With generous doses of sarcasm an article by Tampa Times columnist Daniel Ruth not only compares Citizens consumer treatment to that worthy of a “broken-down plow horse” but his so called “fly by night” takeout carriers have names like “Skippy’s Taco Bus and Property Insurance”; “Zippy’s Inflatable Playground Balloons and Property Insurance”; and my favorite…
“Big Bubba’s Catfish and Property Insurance”.
While I am not defending the actions of takeout carriers, some with horrible agent and consumer communications, I do understand why there is concern in the domestic community.
But, the problem is Weiss Ratings.
Using Weiss as his Bible Ruth said it this way…
Of the takeout companies Citizens has tried to schlepp its customers into, Olympus received a D-plus (that’s comforting), Homeowners Choice was given a D (obviously they didn’t pull an all-nighter), Heritage and Avatar got C’s, Fidelity had a barn-burning C-plus, and Elements was too new to the business to even earn a rating.”
Question: what if Weiss was categorically and irrefutably, wrong?!
Maybe Weiss deserves an “F”!
Ask yourself. How responsible is it to rank carriers that exclusively insure property on the world’s most hurricane prone peninsula, without even bothering to gather, much less analyze, their catastrophic reinsurance treaties? What about retention limits? What about recapitalization agreements? What about their Cat Fund purchase?
Keep in mind, reinsurance can be more than 50% of the premium.
It’s like Motor Trend awarding “Car Of The Year” without checking to see if there’s a motor!
The resulting media damage is real and getting worse. In addition to the Tampa Times, the Sarasota Herald Tribune has picked up on it. So have others. And, hopefully you read my blog criticizing the Palm Beach Post (and Weiss) for the same thing.
Another question: what would happen if Weiss’s pseudo-ratings actually caused a run on someone’s bank? What if its material oversights and bogus comparisons resulted in mass mid-term cancellations for a carrier?
Shouldn’t “Big Bubba’s Catfish and Insurer Ratings” be held accountable?
Some have told me they think it’s defamation. Florida’s statutes even attempts to protect consumers against this sort of thing. FS-626.9541 says it is a violation of the insurance code for any entity to “…knowingly…disseminate…any…statement with respect to the business of insurance, which is untrue, deceptive, or [misleading].” Emphasis added.
What could be more “misleading” than ignoring reinsurance to give “D” ratings compared to “A+” for Citizens?
Look, I get it. Nobody is likely to sue Weiss, (much less win). On the other hand…
…Policyholders of Skippy’s Taco Bus & Insurance Company vs. Big Bubba’s Catfish & Insurer Ratings might yield an interesting new precedent.
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