St. Farm Withdrawal
Aug 07, 2009
The news that State Farm intends to withdraw from Florida further weakens our broken property insurance system and focuses more attention on the small domestic insurers that are left to pick up the pieces. A situation that should be a cause for alarm to us all.
I’m in the business yet I cannot come close to deciphering all the machinations the legislature has put the property insurance industry through in Florida. The result of all this twisted legislation is a regulatory climate that is so foul that the pullout of all the A. M. Best rated carriers is nearly complete….well done, Mr. Governor. What’s left are scores of small, domestic carriers that are ill-equipped to handle the massive property needs of a state like ours, even though we’re told they have a “rating”. Do not be fooled by these claims of an “A” rating from some mysterious rating bureau. Ask yourself how legitimate a grade of “A” can be when it’s handed to a 1-yr old insurance company that buys its reinsurance from the underfunded FL CAT Fund and has never experienced a Hurricane in FL nor managed the logistics of handling thousands of claims at once. An insurer like this has “earned” a rating of A?----This is patently absurd. Not all non-Best rated insurers are scary, but the public should be aware of the difference as there’s only one “A. M. Best” and most other just can’t be trusted, especially when they grant superior ratings to clearly undeserving insurers.
The free market system is the best solution for our crises and will bring back the national, Best rated carriers we so desperately need. Government plays a valuable regulatory role but should operate in the background, not the forefront, of this problem. The sooner this is allowed to occur the quicker we get back to a stable insurance system using carriers we all can have confidence in.