Tag: Florida

Low tide, rising rates sink all ships

The study is expected to have many benefits. For one, it would give leaders a clear cost-to-benefit analysis. As important, the wind mitigation study would allow for systematic improvements in the hurricane resistance of buildings in the six counties on the Mississippi Gulf Coast (Hancock, Harrison, Jackson, Stone, Pearl River and George) by utilizing wind-resistant construction techniques to reduce property damage and/or loss.

This would result in a significant reduction in insurance premiums, as well as reduce the negative economic impact of a hurricane on the entire state and its citizens, the MID said.

Florida’s mitigation discount experience suggests any premium reduction in Mississippi will be short-lived, according to the latest news from Tallahassee.

In the coming months, hundreds of thousands of Florida homeowners will see insurance bills increase.  And many others will open their mailboxes and get the insurance industry’s version of the pink slip, forcing them to buy coverage from the state or turn to companies they might never have heard of. Continue reading “Low tide, rising rates sink all ships”

Tying up a few loose ends – Florida puts State Farm on the ropes

There is literally so much financial news out regarding the insurance industry picking topics is like shooting fish in a barrel. For instance we’ve largely ignored Nationwide’s re-mutualization that earned CEO Jurgensen a fat multi-deca million dollar bonus. Unlike the Hartford, Nationwide remains financially solid. One story we have been keeping up with is the ongoing State Farm saga in Florida where there has been lots of news which in turn gives me the opportunity to tie some concepts together. To set this up we first we need to backtrack to a post we could not have done without our very good friend Sup, who is very kind in sharing a lifetime of industry experience with us here at Slabbed:

So why would SF take this other position? I suggest it is to put more pressure on the governor, Mr. McCarty and politicians. If the SF agents have no other options, they will do everything they can to retain these clients by placing them in Citizens, which further jeopardizes that carrier’s solvency. Is this “hard ball”? You bet it is, but it brings the terrible situation in FL to another level.

Sup nailed it of course, this is exactly what the Farm was doing. Imploding Florida Citizens Insurance also makes the entire market toxic for the other P&C carriers which is the other level Sup referred. While the ladies and gents at FLOIR certainly don’t need us to tell them what is happening behind the scenes as Commission McCarty runs a very tight ship, someone at FLOIR reads us on a regular basis and IMHO planned in advance for insurance hardball State Farm style.  Daniels Hays at the National Underwriter picks it up from there:

Florida Insurance Commissioner Kevin McCarty in a harshly worded order has told State Farm it can go forward with its plan to exit the state’s home insurance market, but only under stringent conditions he has set to protect policyholders.

The company, which has 1.2 million home and condominium policyholders in the state, will not be allowed to dump its customers on Citizens Property Insurance Corp., the state-run insurer of last resort, the order states, adding that State Farm should allow its agents to place policies with other private insurers.

The order called the State Farm argument that it needs to withdraw because it faces the danger of insolvency and inability to play claims “both disingenuous and misleading.”

State Farm, the order said, “created its current ‘crisis’ by failing to pursue the opportunities that were available to reduce its expenses and mitigate its decrease in premium volume.”

According to the company, during the first three quarters of 2008 it saw its surplus reduced by $201 million. The company moved to withdraw after it was denied an average rate increase of 47.1 percent…………. Continue reading “Tying up a few loose ends – Florida puts State Farm on the ropes”

Breaking: State Farm Dumps Florida….

We’ve blogged about State Farm’s wacky schemes to price gouge Florida consumers many times here before beginning with mass cancellations right on through to their beat down by the hand of Florida Insurance Commish Kevin McCarty. Other posts on this subject can be found here and here. As Mississippians can attest first hand the good neighbor fights very dirty and this Florida pullout fills that bill. We can only hope McCarty shows them the door completely and in the entirety not allowing the Farm to cheery pick profitable business while dumping their less desireable lines on the taxpayers.  Daniel Hays at the National Underwriter has the story:

State Farm, Florida’s second largest property insurer, said today it is pulling out of the Florida home insurance marketplace two weeks after being turned down for a 47.1 average rate increase by the state regulator.

The company said it had filed plans to discontinue its Florida property insurance product lines because of its “substantially weakened financial position” related to its inability to obtain approval of “what it believes to be adequate property insurance rates.”

Florida Insurance Commissioner Kevin McCarty on Jan. 13 had upheld an administrative law judge’s ruling that State Farm had not proven a case for an increase.

In a statement today Mr. McCarty said, “Although this is disappointing news for Floridians, who have been loyal customers of State Farm, we are not surprised by State Farm’s decision to stop offering all property insurance in Florida.”

He said the Office of Insurance Regulation had “been hearing for months of possible plans to make such a move in Florida, including a document submitted to the office as recently as Dec. 5 as part of their recoupment filing that showed an anticipated reduction to 655,000 HO policies by 2010.” Continue reading “Breaking: State Farm Dumps Florida….”

More Evidence of Slabberator Misuse: The Farm’s “Sham Transactions”, Zurich’s Sham Reinsurance Deals

Ladies and Gents if you or I were to do these things that insurance companies do regularly, a stretch in the federal pen would be a certainty so please do not try this at home. (H/T Steve, Mr CLS and unnamed others)

First let’s start at the National Underwriter to find out  why Zurich is paying a substantial fine to the captured regulators at US Securities and Exchange Commission who could not ignore the “round robin” transaction:

Zurich Financial Services has paid $25 million to settle a securities fraud action by federal regulators over its use of phony reinsurance transactions to pump up its financial statements.

The Zurich, Switzerland based corporation, which admitted no guilt, said it had settled the civil case to “eliminate the burden, expense and uncertainty of potential enforcement proceedings.”

SEC’s action stemmed from company activity from 1999 through 2001 with a former Zurich subsidiary, Converium Holding AG (now known as SCOR Holding (Switzerland) AG). The company said, “None of the individuals responsible for these transactions has been employed by Zurich for several years.”

According to the SEC announcement, the company helped Converium with a fraud that involved the use of finite reinsurance transactions to improperly inflate Converium’s financial picture. Continue reading “More Evidence of Slabberator Misuse: The Farm’s “Sham Transactions”, Zurich’s Sham Reinsurance Deals”

Florida reinstates Allstate after gaining cooperation

Yahoo finance news reports Allstate agents in Florida can resume selling new car insurance and other policies in Florida after the insurer turned over documents showing how it sets homeowners rates – and that’s good news for all involved.

h/t to Supsalesmgr who brought the news to slabbed and posted this encouragement on ALL finance.

What is important is ALL has pretty much gotten out of the earthquake business and most of their hurricane mitigation plan is in place. That, along with plenty of reinsurance, positions ALL pretty well going into this hurricane season. Continue reading “Florida reinstates Allstate after gaining cooperation”

Breaking: Allstate Loses Appeal, Florida Suspension is On

Thanks to Mr CLS for the heads up.  From Commissioner McCarty’s office in Tallahassee.

I’m pleased to report that the First District Court today has again affirmed the appropriateness of the Office’s action in issuing the January Immediate Final Order suspending Allstate’s licenses to sell new business in Florida; it has denied Allstate’s request for a rehearing and has lifted the stay of the suspension. As a result, the suspension now is back in effect.

We are currently reviewing the Court’s opinion and the status of Allstate’s compliance with the law, Section 624.318(2), Florida Statutes, which requires them to freely produce documents requested by this Office. We will be issuing a more detailed statement later today.

The suspension applies to Allstate Floridian Insurance Co., Allstate Indemnity Co., Allstate Property & Casualty Insurance Co., Allstate Insurance Co., Allstate Floridian Indemnity Co., Allstate Fire and Casualty Insurance Co., Encompass Insurance Co. of America, Encompass Indemnity Co., Encompass Floridian Insurance Co. and Encompass Floridian Indemnity Co., and it only suspends the companies from writing new business in Florida.