Florida’s persistent battle with insurers over rates and coverage is spreading to other states and could have an affect on insurance customers nationwide.
New York, which prevented insurers from forcing residents to buy car and homeowners insurance from the same company in order to avoid cancellation, now wants to order insurers to set aside their record profits for future hurricanes.
Massachusetts and New Jersey are contemplating similar proposals.
Connecticut’s attorney general accused the nation’s largest reinsurance brokerage of price-fixing, rigging the market to run up profits by forcing insurers to run up rates.
So far, these regulatory and legislative efforts in Florida and elsewhere haven’t resulted in lower prices or guarantees of coverage. In fact, the largest insurers, Allstate, State Farm and Liberty Mutual, all have announced rate hikes and withdrawals from northern shores that have not seen a hurricane in nearly 70 years.
Where will it all end? Is there a chance large insurers will simply refuse to comply and refuse to service states that limit their ability to manage risk?
“There are such large markets that individual companies are reluctant to walk away from that much premium,” says Bill McCartney, insurer USAA’s senior vice president for regulatory policy and the former insurance commissioner of Nebraska. “(But) there is a tipping point. Florida is getting awfully close to it.”
Source: Gannett News Service, Paige St. John (11/02/07)
