The World’s Property and Casualty Amusement Park
Most of the world knows Florida as a major tourist destination. Over the last 20 years Florida has become a hotbed of insurance-related issues, too. When Florida and insurance is combined, most thoughts immediately turn to the hurricane/catastrophe issue. This issue is a major driver in the Florida marketplace as hurricanes are a major peril and account for a majority of the catastrophic risk potential for the state. But in addition to hurricane risk, Florida faces major issues that impact the entire property and casualty insurance industry.
The year 2010 generated significant issues for the P&C industry in Florida even though the state was spared from any major catastrophic wind events in 2010. Normally, that would cause a breather for the P&C industry and give companies the ability to post profits. However, the roller coaster of insurance issues did not stop. 2010 brought Florida a new ride: Insurance Fraud Capital. As Mother Nature decided to vacation elsewhere, the industry faced new threats, including: staged accidents, filing of sinkhole claims in regions that have never experienced activity, and a flurry of claim activity on events that took place 5 years ago.
On top of those issues, Florida is impacted by defective Chinese drywall and a legal system that twists the typical claims adjustment process. All of these issues sit on top of the huge risk of financing of catastrophe risk through expensive reinsurance measures that create an up-and-down amusement park marketplace with too many “downs” in the recent 5 year history.
There is hope in sight. Freshly-minted Florida CFO Jeff Atwater, along with the entire new Florida cabinet, is committed to fighting a culture of insurance fraud and enforcing the laws to promote a healthy insurance marketplace. Atwater is committed to fighting the fraud culture that, though entrenched statewide, has a particular stranglehold on southeast Florida. He has used the power of government to make arrests of culprits of staged accidents with fraudulent care claims along with public adjusters who are scamming the system. The Florida legislature is currently discussing new laws that will create tougher punishments and put roadblocks in place to reduce insurance fraud.
Florida faces some major obstacles to reaching a healthy and efficient marketplace. Some issues are physical to the geography of the state and can’t be avoided. But 2011 brings a year of hope and optimism for change. Florida’s cabinet positions are now filled with people committed to bringing Florida’s economy back to a growth phase. A major part of that plan requires creating a healthy insurance market, and that market will not be healthy until the culture of fraud and entitlement in the insurance claim process is gone.
We all know that Florida will experience another major natural disaster at some point. The state should promote insurance innovation by combining the best laws with a solid regulatory environment. Florida needs an environment that will attract capital and the best possible talent in the private and public sectors to create solutions for all the issues facing the state. Then, Florida can go back to enjoying being a place where dreams come true.
Tell us what you think about the current state of the Florida insurance market place, and what you think the future holds.