Floridians Deserve Responsible Insurance Regulation
Guest Column by Jay Newman
Hurricane season is less than two months away and, as Chairman of the Board of Sawgrass Mutual Insurance Company, I am interested in legislative efforts this session to strengthen insurance companies so that claims can be paid fully and quickly when hurricanes strike Florida.
Done right, these legislative efforts will provide security for our fellow residents this storm season and hurricane seasons far into the future. But if the Legislature gets it wrong, our fellow citizens, their homes, businesses and property will be at even greater risk. Citizens Property Insurance Company, the state-run property insurer, would continue to grow, and Floridians would be faced with even higher assessments (taxes) from Citizens. None of us can afford to let that happen.
Florida lawmakers are suggesting some changes to the business structure that has allowed private insurance companies like mine to raise capital and quickly begin participating in the Florida property insurance market. This business structure involves the use of managing general agents (MGAs), which are regulated by the Office of Insurance Regulation (OIR), and it has proven successful in bringing new capital to Florida so that private insurance companies can keep families from being forced to get insurance on their homes from Citizens.
It is therefore imperative that the legislative fixes focus on closing any loopholes that may exist. The fixes, however, must not prevent companies from being able to attract badly needed private capital to the Florida property insurance market. This will be critical to Florida residents after the next hurricane strikes Florida when insurance companies may need to get infusions of capital to maintain their capacity to provide property insurance coverage and prevent Citizens from growing rapidly.
Legislation currently being considered in the Florida Senate and the House should strike an appropriate balance that avoids unwarranted regulatory overreaching that would scare away investors and addresses the factors that have caused many Florida property insurance companies to suffer financial losses even though Florida has not been stuck by a hurricane in over four years.
In particular, the Legislature should pass and the Governor should sign legislation that addresses such factors as the increasing number of frivolous sinkhole claims, the flurry of reopened Hurricane Wilma claims almost five years after that hurricane struck Florida, the apparent fraud associated with many wind mitigation inspections, and the need for insurance companies to be able to quickly recognize changes in insurance costs in their rates. These are all essential parts of creating a vital and stable private insurance market in Florida and reducing the size of Citizens.
The Florida-based property insurers are working to assure that all of these areas are addressed by the Legislature in order to better protect our state against the financial consequences of natural disasters. After all, as members of the Florida-Based Property Insurers CEOs Group, it is also our families, our homes and our businesses we are protecting.
Jay Newman is Chairman of the Board of Sawgrass Mutual Insurance Company, a Florida-based property insurance company with home offices in Davie in Broward County. Previously, he served as executive director of the Florida Property & Casualty Joint Underwriting Association and was the first executive director of Citizens Property Insurance Corporation, created in 2002 as a successor to the FRPCJUA. Jay lives in Tallahassee.
