Even before Sept. 11, rates for most types of property and casualty coverage were inching up. Investment income is down because of lower interest rates and a sagging stock market. Insurance rates now are expected to accelerate as insurers pay more for reinsurance in 2002. The good news: There should be enough reinsurance to go around, industry analysts say.
Higher premiums will help some struggling insurers, but not all. If conditions don't drastically improve, there could be a number of failures. "Florida will have more insolvencies than we've seen in a long time," predicts John Gwynn, an industry analyst at J.D. Gwynn & Associates.
Businesses and consumers alike will have to shoulder significant rate increases for health insurance. At the same time, the number of companies writing health coverage in Florida will continue to dwindle.
On the regulatory front, Florida Insurance Commissioner Tom Gallagher says his department will be pushing a health insurance reform bill aimed at increasing the number of carriers. "We're not perceived as a friendly market for health insurance," Gallagher says.
Elsewhere, look for Gallagher to continue lobbying for his plan to merge the state's residential JUA and the windstorm pool into one new entity called the Citizens Property Insurance Corp.
Danger Ahead
The small group of Florida companies that specializes in insuring the riskiest drivers continues to teeter on the edge. Last year, Fortune Insurance Co. was liquidated and two others were in rehabilitation, and more could suffer the same fate this year.
Alarmed over the growing crisis, the Department of Insurance is trying to get the Florida Auto Joint Underwriting Association -- the state's insurer of last resort -- to develop a rescue plan. However, insurance industry representatives serving on the board are reticent about using the JUA's capital to prop up failing companies.
Trends
Security Concerns: Damage caused by the Sept. 11 terrorist attacks could cost insurers as much as $80 billion, according to some early estimates. Consequently, insurers now will exclude terrorism from their coverage. The industry is looking to Congress to create some type of federally supported terrorism catastrophe pool.
Company to Watch: After selling his interest in an insurance brokerage in 1995, William Poe Sr. and his family jumped to the risk side of insurance, selling policies to homeowners in the state's residential joint underwriting association. This year, Tampa-based Poe Financial Group expects to write more than $100 million in premiums. Capital and surplus have grown from $9 million to $50 million. For now the company writes only in Florida, but its longer-term plan is to become a regional player, says President Bill Poe Jr.
Well-positioned: Florida United Businesses Association sold its workers' compensation insurance operation several years ago. But with demand from smaller employers for workers' comp coverage continuing to grow, FUBA is back in the game. The organization's self-insurance pool expects to write $5 million to $10 million in business this year, says Tom Stahl, FUBA's executive director.
Vital Statistics: Florida businesses and consumers paid $35 billion in premiums for all types of insurance in 1999. That's a 22% increase over premiums paid in 1995. There are 3,270 insurers licensed to sell insurance in Florida, of which only 884 are Florida-based.