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Columns

Insurers' perfect storm of support

By TOM ZUCCO, Times Staff Writer
Published November 2, 2007


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For weeks, Gov. Charlie Crist and state insurance Commissioner Kevin McCarty have told us they suspect the insurance industry is plotting with rating services, reinsurance companies, hurricane computer modelers and trade associations to sabotage legislation passed in January designed to lower homeowners premiums.

The industry, of course, denies all this.

You can get a glimpse of where the state plans to go with this by logging on to www.naic.org/committees_c.htm and clicking on the Sept. 28 public hearing MP3 Audio 2 file on hurricane computer models, those mysterious "black boxes" used by insurance companies to predict future losses and set rates. The hearing was held by the National Association of Insurance Commissioners.

Here's an exchange between McCarty and Mitch Sattler, vice president of public policy for Risk Management Solutions, a leading hurricane modeler. Sattler had argued that a five-year model accurately predicts losses, though Florida regulators have not approved its use.

McCarty: "Did you, when you were doing your inquiries with regard to the use of a time line, did you also ask rating organizations what they thought an appropriate time line would be?"

Sattler: "I don't actually recall, commissioner. I actually don't know."

McCarty: "But it's possible that you did ask them?"

Sattler: "I guess. Yeah."

McCarty said later he isn't accusing Risk Management of anything. He asked those questions because a five-year model projects higher losses than a longer-term model.

"But I think this back and forth is very telling," he said.

- - -

Leeeeet's get ready to rumble. It's not Ali vs.Frazier, but if you've found yourself caught up in the property insurance wars, try to catch the Battle of the Bobs. On Nov. 15, Bob Hunter of the Consumer Federation of America will debate Bob Hartwig, president of the industry-backed Insurance Information Institute.

Hunter, the industry's highest-profile critic, and Hartwig, the industry's lead public defender, couldn't agree on the spelling of insurance, let alone topics like rate regulation and industry profits.

The debate begins at 11 a.m., it's free, and it can be heard at http://events.unisfair.com/rt/nuco~futureofinsurance.

- - -

The set-up: Journalists from the St. Petersburg Times, Miami Herald and the New Orleans Times-Picayune spoke Tuesday at the Property Casualty Insurers Association of America annual meeting in Boston.

Question from the audience: Shouldn't pride of ownership motivate homeowners to strengthen their homes against hurricanes?

Here's what I said: In a perfect world, yes. But believe it or not, many people can't afford to buy shutters or replace their roof. There has to be a carrot. Like, say, a discount on our premium for doing the work. After all, hardening a home against hurricanes reduces the risk an insurance company takes on.

Then I invoked Ted Gembicki, the Spring Hill homeowner who, after spending $5,200 for storm shutters, was awarded $16.11 in discounts from State Farm. Gembicki said he would put his windfall toward the purchase of ... a pizza.

No one laughed.

Tom Zucco can be reached at zucco@sptimes.com or (727) 893-8247.

[Last modified November 1, 2007, 23:28:23]


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