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PIA of Florida Panel Addresses Florida Insurance Market

ORLANDO, May 18, 2006 - Insurance agents from all over the state convened here on May 12, 2006 to hear a panel of...
May 18, 2006

Insurance Agents Hear From Companies, State Officials on Eve of Hurricane Season

ORLANDO, May 18, 2006  - Insurance agents from all over the state convened here on May 12, 2006 to hear a panel of insurance experts provide their opinions and insight into our state's struggling property market, in light of Florida's recent legislative session and in preparation for the June 1 start of the Atlantic hurricane season.

Insurance company representatives, along with spokespersons from Florida Office of Insurance Regulation, the Florida Department of Financial Services, and the Florida Surplus Lines Service Office answered pressing questions put forth by moderator Len Brevik, executive vice president of the National Association of Professional Insurance Agents (PIA). The panel discussion was produced by the Professional Insurance Agents of Florida, headquartered in Tallahassee.

"Ask anyone about the kinds of natural disasters that occur in the United States and chances are they'll name just a few, such as hurricanes, tornados and floods," said Brevik. "But that's just part of the picture."

"USA Today recently published a list of the natural disasters that plague the United States," Brevik added. "There are 18: blizzards, tornadoes, lake-effect snowstorms, earthquakes, severe hailstorms, heat waves, flash floods, hurricanes, monsoons, typhoons, ice storms, thunderstorms, lightning strikes, tsunamis, Nor'easters, volcanic eruptions, river valley flooding and wildfires/firestorms. And every state is as risk."

Brevik said the scope of the problem poses a challenge: how to pay for natural disasters, especially in a new era of "super catastrophes" such as last year's Hurricane Katrina, or the four hurricanes in rapid succession that devastated Florida during 2004.

"That's why the Professional Insurance Agents nationally have stated that the time has come for Congress to adopt and fund a coordinated natural disaster catastrophe program. Hurricane Katrina and the Big Four Florida storms of 2004 served as an awesome reminder that neither one state, nor a regional grouping of states, can fund or support a catastrophe reserve fund. A national program for natural disasters has been discussed for many years.

"The time has come to fashion a public-private collaborative effort that includes prorated participation by states and local governments, together with the all sectors of the financial services industry," Brevik said. "Providing such a backstop for natural catastrophes will benefit both consumers who are victims of storms, and insurance carriers suddenly overwhelmed by an onslaught of extraordinary storm-related claims."

The panelists noted that during 2004 and 2005, private insurance companies collected an estimated $18 billion in premiums from 11.9 million residential policyholders in the state. During the same period, these companies paid out $38.5 billion in claims for damages. Citizens Property Insurance Corp., the insurer of last resort, collected $1.2 billion in premiums and paid out more than $3.9 billion in claims for damages, amassing a $2.2 billion deficit during the last two years. Panelists said that these deficits represent an unsustainable business model for the insurance market and could negatively affect all business sectors in Florida.

Panelists included Sam Miller, Executive Vice President, Florida Insurance Council; Nancy Baily, President and CEO, Travelers of Florida; Sharon Binnun, Deputy Commissioner, Office of Insurance Regulation; Carolyn Daniels, Assistant Director of Agent Relations, Florida Surplus Lines Service Office; Peter Corrigan, chief Underwriting Officer, Florida Family Insurance Company; John Jerger, President, Westpoint Underwriters; Ed Sowers, Catastrophe Agency Advocate Manager, Citizens Property Insurance Corp.; and Lauren Cain, Consumer Advocate, Florida Dept. of Financial Services.

Panelists applauded Florida legislators' recent bill to appropriate $250 million in loans to insurance companies to help them continue to write coverage and to take policies from Citizens Insurance, the state's insurer of last resort. Homeowners will also receive funding from the bill, which includes $250 million in grants to make older homes more resistant to hurricane damage. Governor Jeb Bush signed the bill on May 16.

PIA of Florida is a trade association based in Tallahassee representing agents throughout the state by providing members with legislative advocacy; quality education programs; timely, unbiased information; and discounted member services designed to help insurance agents compete successfully. For more information, please go to http://www.piafl.org/.

Founded in 1931, and celebrating its 75th anniversary in 2006, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America.

PIA FL Press Contact:
Mary Frederick
850-893-8245
800-277-1171

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