Facts, details on private insurance growth
The trouble with facts is that there are too many of them, and then there’s the rest of the story. One of the facts relayed in Governor Crist’s veto letter on the property insurance bill (HB 1171) was that new property insurance writers have brought “a significant amount of new capital” to the state. That’s true, and the rest of the story is that this capital is largely not helpful to most homeowners. An editorial in the Tallahassee Democrat last week was the first to direct attention to the story behind this infusion of $4.3 billion in capital – specifically that the bulk of the money is from surplus line insurers. Today’s front page of the St. Petersburg Times reports that $4 billion of the $4.3 billion in new capital comes from 14 surplus lines carriers. So that means just $300 million in new capital is available from the remaining 26 insurers who have set up shop in Florida since 2006. That explains why homeowners have limited choice for property insurance.
Surplus lines insurers are obviously important to Floridians; they are a private market insurer of last resort because they write insurance policies for properties that standard insurers won’t cover, such as very high-end homes and very risky businesses. Here’s an interesting tidbit about surplus lines carriers: They are unregulated. How ’bout that!