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Sdallnct
10-30-05, 04:25 PM
I'm not sure what the answer is, but the Florida State insurance plan was always thought of as the "model" of what should be done. But now with it in serious debt, there are a lot of questions that can make for some interesting discussion:

-Florida's State run "Citizens" insurance is the 2nd largest insurer of property in the entire State despite the fact it charges more then any other insurance company for coverage.
-If it can't work in Florida can it work on a nation wide basis?
-Is this on a small scale an example of what would happen if there was a national health program? If you think national would work better, take a look a the National Flood Insurance Program - it is in bad shape as well.
-How do those in Florida feel about having to pay extra on their own insurance for this state run plan even though they may have never had a hurricane loss? If a National plan was enacted, how would those in Kansas feel about having to pay for hurricane coverage?

State House begins looking into the ills of Citizens insurance company
By Alan Gomez

Palm Beach Post Staff Writer

Wednesday, October 19, 2005

TALLAHASSEE Legislators took their first crack Tuesday at what is expected to be a months-long look into the inner workings and failures of Citizens Property Insurance Corp., the state's home insurer of last resort.

On the heels of a four-storm 2004 summer that left the company short $516 million and besieged with thousands of complaints over how they handled claims from those storms, Citizens recently has been faced with ethics allegations at the top of its administration.

Its chief financial officer resigned in September after he was accused of taking kickbacks from a Texas firm in exchange for work in Florida and two other executives were forced to resign after allegations that they conspired to create a company to do business with Citizens.

At the same time, Citizens probably will be asking homeowners to pony up more cash for insurance coverage. The insurer's board will vote on an average 37 percent rate hike next month.

And Citizens already is reaching into the pockets of every homeowner in Florida to cover the $516 million deficit incurred after last year's hurricane season. Homeowners statewide must pay $68 for every $1,000 in annual insurance premiums they already pay.

State officials have responded to the ethical questions with a bill that would require Citizens, a quasi-governmental entity, to implement the same conflict-of-interest rules that are required of top-level state officials.

The bill, sponsored by Rep. Dennis Ross, R-Lakeland, and Sen. Mike Fasano, R-New Port Richey, and endorsed Monday by Attorney General Charlie Crist, was debated for the first time Tuesday by the House Insurance Committee. The Senate's Banking and Insurance Committee will discuss Citizens again today.

Also Tuesday, Florida Insurance Commissioner Kevin McCarty asked all the state's quasi-governmental insurers to submit their standards of conduct for their senior officials and asked them to consider amendments that would improve accountability.

Some members of the House committee were disappointed by a Citizens presentation Tuesday, when Rep. Randy Johnson, R-Celebration, said they asked for too much autonomy in fixing their internal problems. "It's like locking the bank vault after the money is gone," Johnson said. "And now we're just supposed to take their word for it? I think that we need a top-down, bottom-up review of Citizens."

Ross, the chairman of the insurance committee, said the panel will be patient in its analysis of Citizens, waiting for ongoing investigations by the state into possible criminal behavior at Citizens.

"My focus is trying to facilitate Citizens in making sure that they do the internal enhancements to their procedures so that we don't have a repeat of the situations and the allegations that are out there now," Ross said.

But Ross and others warned that focusing solely on the ethical problems faced by Citizens could leave the company's biggest problems producing affordable and available homeowners insurance to the state's hardest-to-insure properties left behind.

In addition to the average 37 percent statewide rate increase that will be voted on next month, a study released last week said that Citizens should jack up windstorm rates an average of 80 percent statewide.

Citizens high-risk pool covers 775,000 properties in coastal areas where private insurers refuse to cover hurricanes. That includes 62,500 homeowners in Palm Beach County and 2,000 homeowners on Hutchinson Island in St. Lucie County. The insurer has no wind-only policies in Martin County.

"Clearly there's a perception out there that things were out of control... and they've got to address them," said Rep. Carl Domino, R-Jupiter, a member of the insurance committee. "But at the end of the day, will that really impact the fact that their rates are going up a whole lot? Probably not. And that's what we have to deal with."

grundle
10-30-05, 05:18 PM
No.

Ranger
10-30-05, 05:24 PM
Putting aside insurance coverage from the government, what exactly is the role of the state insurance commissioner? Does he regulate rates from private insurers? If that's the case, then it probably would make sense to move towards deregulation of insurance rates and let companies independently determine what rates to charge so maybe they may be willing to stay and cover hurricane/flood damages. Though even with that option I doubt they would be willing to cover those damages anyway.

Sdallnct
10-30-05, 05:43 PM
Putting aside insurance coverage from the government, what exactly is the role of the state insurance commissioner? Does he regulate rates from private insurers? If that's the case, then it probably would make sense to move towards deregulation of insurance rates and let companies independently determine what rates to charge so maybe they may be willing to stay and cover hurricane/flood damages. Though even with that option I doubt they would be willing to cover those damages anyway.

Well actually in many states a Department Of Insurance (DOI) was developed to make sure insurance companies did have rates to LOW. The DOI was there to make sure competition didn't drive rates so low that a company would not have the resources to pay with something happened.

Of course today the DOI in many cases is a politial arena that tries to keep companies from raising rates.

Of course if you say insurance companies should charge "true" rates then those by the coast may not be able to afford insurance. Of course some argue the availability of insurance in these areas is what allows growth in these areas.

mosquitobite
10-30-05, 06:11 PM
No poll?

My answer: no

Sdallnct
10-30-05, 06:19 PM
No poll?

My answer: no

Ooops...didn't think of a poll. My bad...Thanks for the answer tho!

Red Dog
10-30-05, 07:08 PM
Hmmmmmm.



;)

al_bundy
10-30-05, 07:39 PM
even though the FEMA insurance plan loses some money a lot of years, there is a big difference with the Florida plan. The FEMA plan is nationwide and is able to spread the risk among a lot more people, many of whom live in low risk areas. Because of this year's hurricane season, the Florida plan has too much risk.

Sdallnct
10-30-05, 08:08 PM
even though the FEMA insurance plan loses some money a lot of years, there is a big difference with the Florida plan. The FEMA plan is nationwide and is able to spread the risk among a lot more people, many of whom live in low risk areas. Because of this year's hurricane season, the Florida plan has too much risk.

Of course the problem with FEMA is only those that are in flood areas purchase the insurance. Meaning sooner or later they will have a claim. Sure you can spread the risk, but if sooner or later everyone will have a claim, then I don't think it will work. Some have argued that FEMA should actually LOWER the cost of coverage in hopes of getting more people to purchase the insurance and thus spread the risk even more. However if you spread the risk the those who are less likely to have a loss, then you get someone in Dallas with low risk of flooding helping pay for or subsidizing high risk areas such as the coast. If I don't live by the coast why do I have to help pay for claims of those that do?

Most private insurance companies don't do that. That is why insurance in Arizona is much, much cheaper then insurance in Texas, California or Florida. Arizona as a whole doesn't have the same risks (hail, fire, hurricane).

But I suppose if you buy flood insurance your geographic area doesn't matter. It really is the same risk. Flood, is Flood regardless of where it happens. hummm...

Sdallnct
10-30-05, 08:18 PM
http://www.washingtonpost.com/wp-dyn/content/article/2005/10/18/AR2005101801650.html?nav=rss_politics

al_bundy
10-30-05, 09:30 PM
Of course the problem with FEMA is only those that are in flood areas purchase the insurance. Meaning sooner or later they will have a claim. Sure you can spread the risk, but if sooner or later everyone will have a claim, then I don't think it will work. Some have argued that FEMA should actually LOWER the cost of coverage in hopes of getting more people to purchase the insurance and thus spread the risk even more. However if you spread the risk the those who are less likely to have a loss, then you get someone in Dallas with low risk of flooding helping pay for or subsidizing high risk areas such as the coast. If I don't live by the coast why do I have to help pay for claims of those that do?

Most private insurance companies don't do that. That is why insurance in Arizona is much, much cheaper then insurance in Texas, California or Florida. Arizona as a whole doesn't have the same risks (hail, fire, hurricane).

But I suppose if you buy flood insurance your geographic area doesn't matter. It really is the same risk. Flood, is Flood regardless of where it happens. hummm...

I've seen the number of policies per state that FEMA covers and it's spread in places you wouldn't think that people would buy even though most policies are in the south east US. The problem is not that sooner or later everyone will have a claim, but that if too many people will put in claims at once. Since FEMA has a much wider coverage area, a bad hurricane season can be offset with policies in Kansas. With Florida a bad hurricane season means that everyone is putting a claim in. It's not an issue of insuring against the unthinkable, but spreading the risk. A Florida only policy is too much risk if a bad storm season comes along.

kvrdave
10-30-05, 09:49 PM
I don't really have a big problem with states deciding to do this, but the Feds definately should not.

As a business owner in Washington, I am forced to buy Labor and Industry Insurance, and naturally despite the fact that there has never been a claim, the rates continue to go up. And I can't look for a different carrier because it is only available from the state. So that defeats what I just said. :hscratch:

I suppose I don't mind a state doing it if it is voted in by the people. But that probably doesn't exist.

Duran
10-31-05, 09:57 AM
No. Government insurance plans are almost always subsidized by taxpayers, masking the real risk involved in the underlying behaviors. Let the market set insurance rates.

al_bundy
10-31-05, 10:28 AM
say the FEMA insurance was abolished and people had to pay higher rates. A lot of our energy production is in hurricane prone areas. People working for the oil companies would demand higher salaries and this can raise the cost of energy even more.

Duran
10-31-05, 10:51 AM
say the FEMA insurance was abolished and people had to pay higher rates. A lot of our energy production is in hurricane prone areas. People working for the oil companies would demand higher salaries and this can raise the cost of energy even more.

Instead, you'd rather pay that extra cost in taxes? What difference does it make?

al_bundy
10-31-05, 10:55 AM
the cost of the FEMA insurance is extremely small

Duran
10-31-05, 11:03 AM
The $5 billion FEMA wants is small? And that doesn't count all the additional funds the feds are pumping into the area.

B.A.
10-31-05, 11:14 AM
Rod Blagojevich wants the State of Illinois to medically insure a good portion of the children in the State.


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