FOR IMMEDIATE RELEASE: January 31, 2008

Contact:      Sam Miller (850) 386-6668 ext 223
                 Gary Landry (850) 386-6668 ext 226

TALLAHASSEE—Faulty research into the property insurance market in Florida is fueling misperceptions about the insurance industry that must be cleared up before the Senate Select Committee on Property Insurance Accountability moves into its next phase of hearings on Monday, February 4.

“The first reality we must all realize is that neither government regulators nor insurance companies are the enemies to a vital and stable market, Mother Nature is the enemy,” says Sam Miller, Executive Vice President of the Florida Insurance Council, a trade association representing some 200 insurance companies and insurer groups operating in Florida.

“When continued misperceptions get repeated over and over again—misperceptions that are based on faulty research and not fact—we lose focus on the real problem that must be addressed through well-reasoned dialogue,” Miller said.

The insurance industry is made up of thousands of Floridians who live and work in this state and have a vested interest in maintaining a high quality of life that every Floridian deserves and expects.

“A strong and healthy insurance market is essential for our state's growing economy.  Insurance affects everything.  Without a strong and viable insurance industry, homes to house Florida’s families could not be built, businesses that provide jobs for Florida families could not locate here and schools that educate our children could not exist,” Miller said.

“That’s why it is imperative that we clear up the misperceptions so we can move past political rhetoric toward real sound solutions that adequately deal with the ever-present threat of hurricanes.  Hurricanes are what threatens our lives, our families our businesses and our schools,” Miller said.

Misperceptions and all the political rhetoric cannot change certain basic facts:

•    Every residential property insurer doing business in Florida reduced its rates effective June 1, 2007 as a result of the Presumed Factor Filings—the first of two sets of filings established by law in HB 1A and by the Office of Insurance Regulation.

•    The rate rollbacks under the Presumed Factor Filings ranged from 2 percent to 35 percent, with the average rollback, according to an OIR report dated January 10, 2008.

•    A further breakdown shows that of about 120 companies listed in the OIR report, 70 companies (60 percent of the companies) lowered rates by 10 percent or greater. Thirty-four insurers (29 percent of the companies) had rollbacks of 20 percent or more.

•    The OIR announced in March of 2007 that it calculated a presumed factor savings of about 24 percent, indicating that as companies completed its presumed factor filings, the average savings contemplated would be about 24 percent.  OIR clearly stated the 24 percent number is an average, not a finite number to be applied to every policy across the state.

•    That estimate turned out to be fairly close as the average rate reduction turned out to be 22 percent, as acknowledged by the OIR in a January 10, 2008 report.

•    34 percent of private companies’ share of the market have had their true-up filings approved by OIR. 

•    The OIR reported it is still reviewing about one-third of all homeowners’ insurer True-Up filings (as of January 3.) It had neither approved nor denied these filings. 

•    And of those companies that were denied, some included rate increases, but others included rate decreases, some as high as 21 percent.

•    Of the approved true-up filings rate rollbacks ranged from a 0.9 percent rollback to a 43.1 percent rollback

•    The average rollback from the group of approved true-up filings is 22 percent.

•    Every insurer is operating under residential hurricane insurance rates approved by the Office of Insurance Regulation – either their Presumed Factor rates which were all a rate rollback ranging from 1 to 43 percent, or their approved True-Up filings, which OIR says produced a 22 percent average rollback.

•    Citizens Property Insurance Corporation purchased almost 40 percent of the $12 billion available from the Cat Fund expansion and now has about 40 percent of the program’s $28 billion total coverage.  The remainder of the coverage, $7.5 billion, was spread among dozens of private market insurers.

•    Citizens Property Insurance Corporation does not buy private market reinsurance, so it didn’t save reinsurance costs.  It did dramatically increase the only resource option it exercises – the Cat Fund.  The effect is the shifting of almost $5 billion in assessments from Citizens to the Florida Cat Fund.

•    After the next major hurricane, assessments will be made on all homeowners, all business owners and all motorists.