CHARLIE’S CURSE

The curse of any perfectionist is in seeing only that which keeps perfection out of reach.  Never being thankful for what’s been gained. Never being satisfied with the status quo.

For me Florida’s improved property market is such a curse.  I’m a perfectionist.

The market, however, has it’s own curse–Charlie Crist’s overreaction to a temporary market adjustment. We were helpless as he stuck pins in the  industry voo-doo doll. Bragging as he did and chiding “…good riddance” to Florida’s future.

Indeed, were it not for his HB-1A and a failure this last 2014 session to enact a handful of common sense reforms we would, in my opinion, be about as close to nirvana as one could expect for the world’s most catastrophe prone peninsula.

Despite Charlie’s Curse, we were a breath away from striking at the heart of what’s been keeping rates, which are going down, further up than they need to be.  Bad Faith repair was considered and seriously debated but, ultimately fell to the side. Significant reform of Assignment of Benefits (AOB) was moving along until trial lawyers and public adjusters caused a few lawmakers, some in the contracting trades, to blink.

Former consumer advocate Robin Westcott’s emergency remediation reforms were in the mix early but lacked a necessary champion. And finally, a reduction in America’s highest public adjuster fee cap was considered, twice, yet abandoned; despite widespread support, including from many public adjusters.

Does anyone think any of these common sense reforms will have a chance next year if Charlie Crist is our Governor?

The future is brighter not because the sun has been shining, helpful as it is.  But, because  leadership from lawmakers and Governor Rick Scott, is paying off.

For example:

  • Thanks to Charlie Crist more than 100 “sticker shock” rate increases were approved every year since 2009, leaving Florida’s average property premium among the highest in America.  But, reasonable reforms, glide paths, sinkhole and Citizens fixes were implemented. Now, according to recent regulatory data, rates are not only going down but, the market is “more robust and competitive” than it’s been in  years.
  • In contrast with today’s “competitive” climate Charlies market was disrupted by record level insolvencies (2009 & 2010).  Of the top 47 unaffiliated domestic residential property writers, only nine showed a net underwriting gain. Eighteen had depleted surplus of $25 million by the end of the first quarter  projecting a year end surplus depletion of $1 billion.  Again, for just the top writers. In 2011 Florida Insurance Guaranty Association (FIGA) insolvency assessments, ultimately passed on to policyholders,   was $293,852,000 resulting in a 9.93% decrease in industry surplus.
  • With over $13 billion in cash The Florida Hurricane Catastrophe Fund (FHCF) is in the best financial shape since its creation 20 years ago.  With borrowing capacity also at an all time high of $6 billion it now has claims paying capacity of $19 billion–enough to meet the requirements of a 1-in-100 year storm or a series of lesser storms.
  • Prior to 2011 Citizens was the most overexposed insurer in America with a policy count as high as 1.5 million. Now it has less than 1 million policyholders; the lowest since 2006.  Policy counts are currently at 942,321 policies in force, a drop of 36% from a high of 1.48 million in October of 2012.
  • Citizens exposure has fallen 41%;  from a high of 1/2 trillion ($515 billion) in November of 2011 to $302 billion currently.
  • Charlie Crist’s actions, including rate freezes and roll backs, caused Citizens to swell with nearly 40,000 new applications every 30 days.  Today, private carriers get the business and Citizens new applications have slowed to a trickle. Last month the personal lines multi-peril account only had 6,810 new apps.  A clearinghouse is helping those who do apply find coverage in the private market, consistent with statutory guidelines.
  • Since Rick Scott took office Citizens has reduced potential assessments on Florida policyholders following a 1-in-100 year storm by 300%– from $12 billion to $4 billion.  This is without the benefit of the Clearinghouse, which will only further these reductions once it is fully implemented.
  • Prior to 2011 private companies wouldn’t write in Sinkhole alley and Citizens filed for sinkhole rate increases of 447% for HO and 631.5% for Dwelling. Today, Florida’s statutory sinkhole changes have limited abuse and fraud so that only a true sinkhole is compensable and those with sinkholes must conduct repairs.  Rate increases and insolvencies due to sinkholes have significantly abated.
  • In 2007 Charlie Crist bragged about the final “…nail into the coffin of the insurance industry”.   Today, the market is poised to become ultra-competitive. More domestics are competing with lower rates and innovative products and, after ten years of cancelling policies at least one larger multi-line carrier, State Farm, has decided to stick it out.

And so… Florida’s property market isn’t perfect and will never be. That’s the perfectionists curse.   A curse I must deal with.

Charlie’s Curse, on the other hand, can only be dealt with by Florida voters.

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