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Sifting for a solution in this big insurance mess

By ROBERT TRIGAUX
Published October 16, 2006

So here was a panel of insurance experts and activists last Thursday trying to find solutions to the mess known as Florida's property insurance market.

Representing the insurance companies was Sam Miller. Sam works for a Tallahassee group called the Florida Insurance Council. He's pretty much the public face here of an insurance industry that loves to remain out of the spotlight.

I like Sam. Known him going on 12 years. He's a pro at defending his industry in unpopular times which, come to think of it, is pretty much all of the time.

Miller knew he would take hostile fire. That's why he brought a prop: A framed photo of his family and dog. He held it up before some 400 frustrated Florida homeowners and told them he was just a regular guy like everybody else.

The ruse worked, Miller still took some heat. But he avoided the one topic that might have made Miller run for cover.

This is the week when the big insurance companies start reporting their quarterly earnings for the months of July, August and September.

The profits are expected to be ENORMOUS.

It's simple math. Huge rate hikes mean sky-high premiums. No hurricanes mean no big claims from customers. The result? Megaprofits.

"Despite the experts' dire predictions last spring, the United States has not been significantly threatened by any storm activity," insurance analyst Cliff Gallant at Keefe, Bruyette & Woods wrote in a note to investors this month. "2006 appears to be on its way to record-setting profit levels."

Call me old fashioned. But I get upset when homeowners get taken to the cleaners, and some even forfeit their homes, while the insurance industry enjoys windfall profits.

Consider this. Energy companies that enjoyed high oil and gasoline prices have ruled the corporate profits roost for the past two years. Analysts say they are about to take a back seat to insurance.

Now, there's a rumor we live in a free market where businesses respond to economic changes. If big insurance companies are about to disclose big earnings, in theory some of this should occur:

1. More insurance companies should come to Florida, lured by the potential to earn big bucks off Floridians.

2. The next round of double-digit rate hikes sought by insurers should be canceled or at least moderated.

3. Insurance companies here should expand their base of customers again instead of dumping the policyholders into the highest-priced insurer of last resort, Citizens Property.

Well, guess what? Little of that is going to happen.

Florida is at an ugly crossroad.

Economically, our dysfunctional insurance market eats away at the state's underbelly, undermining the stability of homeowners and small businesses.

Politically, Florida leaders deserve a "D" for a lack of leadership, innovation and backbone in confronting a major statewide problem.

It never should have gotten this far.

Robert Trigaux can be reached at trigaux@sptimes.com or 727 893-8405.

[Last modified October 16, 2006, 06:03:14]