Insurance Commissioner Kevin McCarty, during the property insurance symposium he hosted last week, acknowledged a national catastrophe fund which some see as the magic bullet is not likely. McCarty renewed his initiatives of the last year for successful legislation to control improper sinkhole claims, reopened hurricane claims and other cost drivers. He acknowledged that the size and role of Citizens Property Insurance Corporation must be debated, that rate-making procedures must be reviewed and seemed to be saying – our words, not his precisely – everything is on the table.

McCarty was the opening speaker for Moving the Market Forward,” a symposium conducted by OIR and Ray Spudeck, McCarty’s consultant, October 21, following the NAIC meeting in Orlando. His comments were distributed to the Florida Insurance Council by Dr. Spudeck today.

“One of the products of this process will be a summary document with consensus recommendations that can be taken forward to our new state leadership in the coming months,” McCarty said. “The decisions that will be made will take some time to implement, but with adherence to a plan and a timetable, I truly belief the Florida marketplace will flourish in the coming years.”

Highlights from his comments included:

While hurricane risk remains a constant presence, our markets have also been roiled by the reopening of previously settled catastrophe claims, and more recently a dramatic uptick in sinkhole claims.

…the private marketplace can and will provide the insurance consumers demand at competitive prices in the right atmosphere.

…despite the untiring efforts of our Congressional delegation in Washington, a national plan does not appear to be forthcoming any time soon…

And, simply put, we cannot wait for that to ever occur; we must be responsible for our own market and take the appropriate actions.

…a private market does rely on businesses being willing and able to enter a market and provide the insurance people want.

Where do we need to be to find the balance between company solvency and consumer acceptance? Is there a better way of determining rates? What features of the insurance contract need a fresh look?

The last panel will talk about the role of Citizens Property Insurance and the Florida hurricane Catastrophe Fund. At one extreme are those that would have them cease to exist tomorrow; at the other those that would have them write all of the property insurance in our state. Truth is likely somewhere in between but where?

Here are the commissioner’s entire remarks:

Good afternoon, ladies and gentlemen. My name is Kevin McCarty. I am Florida’s Insurance Commissioner and I want to welcome you to the Office of Insurance Regulation’s 2010 Property Insurance Symposium “Moving the Market Forward.” I appreciate your taking the time to attend this event and I particularly want to thank our panelists for agreeing to participate.

This is an important undertaking for our marketplace. Since the halcyon days of deeply underpriced homeowners insurance disappeared with the landfall of hurricane Andrew in 1992, Florida’s property market has struggled. By 2004, most would argue that the market was within reach of a sustainable equilibrium. The eight storms of 2004 and 2005 created changed that glide path and our market has felt the effects.

While hurricane risk remains a constant presence, our markets have also been roiled by the reopening of previously settled catastrophe claims, and more recently a dramatic uptick in sinkhole claims.

This symposium is a first step to launching a dialog that will ultimately result in a return to a stable private market environment for property insurance, where consumers will be able to find competitively priced insurance available to them and where insurers can reasonably expect that, with effective management and risk assessment, they can operate profitably.

The underlying premise of this symposium is that the private marketplace can and will provide the insurance consumers demand at competitive prices in the right atmosphere. As many of you know, I have long advocated for a comprehensive rational consistent national plan for catastrophic risk. While I am still disturbed that we have such a wildly disparate system for dealing with natural catastrophes, with the only seemingly common denominator being that Floridians will pay, regardless of the type of catastrophe that occurs, it is also clear to me that despite the untiring efforts of our Congressional delegation in Washington, a national plan does not appear to be forthcoming any time soon.

And, simply put, we cannot wait for that to ever occur; we must be responsible for our own market and take the appropriate actions.

There are many sides to this market debate. I firmly believe that an aggressive statewide program for mitigation, building code enforcement and land use planning is a key part of shaping the risk profile of this state with respect to hurricanes. I also believe that a consuming public armed with the ability to make competitive choices is a key to providing a sustainable market.

At the same time, a private market does rely on businesses being willing and able to enter a market and provide the insurance people want. To that end, this symposium is focused on that facet of the overall picture.

This symposium is designed to elicit the views and thoughts of those underwriters, capital providers, and entrepreneurs that make our market work. The panelists in today’s symposium represent not only academic thought leaders, but as well those that have successfully navigated what may be the most challenging insurance market in the US. I know these people well, and respect their thoughts and views.

We have from time to time had occasions to both agree and disagree on particular matters, but their thoughts do matter as we move this market forward.

The topics we are going to talk about today begin with an overview and outlook for both the residential and commercial property insurance markets. That is, where are we and where are we going as of now?

We will then talk about insurance rates, the rating process and the nature of the insurance contract. Where do we need to be to find the balance between company solvency and consumer acceptance? Is there a better way of determining rates? What features of the insurance contract need a fresh look? This promises to be a lively discussion.

The next panel will talk about reinsurance capacity and stability and to what extent newer types of products may serve to further enhance the solvency of those companies writing in our market. This discussion gets to the very heart of the market; the capital and wherewithal to pay claims. Is there enough? Will it be there after the next storm? Do these new products, standing alongside traditional reinsurance, offer protections sufficient to warrant market and regulatory acceptance beyond where we currently are? This will also be a lively discussion, and truly Florida flavored. In this regard, the demands of our market dictate that Florida is just different than anywhere else.

The last panel will talk about the role of Citizens Property Insurance and the Florida hurricane Catastrophe Fund. At one extreme are those that would have them cease to exist tomorrow; at the other those that would have them write all of the property insurance in our state. Truth is likely somewhere in between but where? We will look at hard facts and figures and take an objective look at the role of these public entities in a private market.

At the conclusion of these panels, we will wrap up and see where we are. One of the products of this process will be a summary document with consensus recommendations that can be taken forward to our new state leadership in the coming months. The decisions that will be made will take some time to implement, but with adherence to a plan and a timetable, I truly belief the Florida marketplace will flourish in the coming years.