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Tough times ahead in insurance industry

Poor stock market performance and some expensive disasters have combined to make insurance harder to find

By JENNIFER GOLDBLATT, Times Staff Writer
© St. Petersburg Times
published February 16, 2003


Getting peace of mind about health and home calamities didn't come easy to Pasco County residents in 2002.

As insurers reeled from losses induced by a plunging stock market and the terrorist attacks, many of them raised rates and pulled the plug on coverage in risky coverage areas. That was bad news for local residents in sinkhole prone areas and small-business owners looking for health benefits for their workers.

"I think that it's poor planning and long-term perspective of the insurance industry," said Greg Roe, president of the New Port Richey insurance company which bears his name. "The industry got burned when the market dropped and didn't have the reserves necessary to handle the catastrophic losses that occurred nationally -- Sept. 11 and significant flooding in the Midwest.

"Because Pasco is a coastal county, it still has a black eye when companies look at what to eliminate," he added. "That's one of the first places that's going to hurt and feel those effects."

A number of property insurers stopped writing policies or decided not to renew them in Pasco and Hernando counties in 2002, even for homes miles from sinkholes and the waterfront.

State Farm Insurance, Safeco, United Property & Casualty, First Floridian and the Hartford Financial Services Group are among those that started limiting coverage here.

Meanwhile, small-business owners scrambled to find affordable health care coverage. Many of them had been able to get group discounts through membership with the West Pasco, Greater Dade City and Central Pasco chambers of commerce. But when the discounting insurer, Hip Health Plan of Florida, pulled out of the Tampa Bay area in 2001, it left hundreds of businesses in the lurch.

"We keep checking, checking, everywhere with the Florida Chamber to see if we can get a lead, try to find (replacement insurance) for our members, but so far, we've been unsuccessful," said Phyllis Smith, executive director for the Greater Dade City Chamber of Commerce. "When you only have one or two people in a small business, you have to insure them individually, and that's really expensive."

Roe anticipates that the insured are going to feel more of the same pain in 2003. Individuals are going to get socked with higher premiums, higher deductibles, and higher copayments, while insurers will carve out more services and charge separately for them.

"The belief is that if (the insured) have more at stake, they're going to be more frugal," Roe said. "But frugality and health insurance don't mix. When people seek medical care they don't think of frugality and they don't want to. They want the best."

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