Is your Florida property insurance provider solvent?
In Florida, crises are as abundant as sunshine. (This cold and gray winter, probably more crises than sun.) Residential real estate, commercial real estate, employment, bank insolvency, population contraction and even political-party-funded back waxing. The crises list is long and diverse.
Today Robert Trigaux writes of another potential crisis:
Weather forecasters are already gearing up with forecasts of an active hurricane season this year -- forecasts perhaps given more validity given El Nino and Florida's bizarrely cold winter temperatures -- and prompting early worries about the state property insurance market. Hurricane season starts June 1.
[...]
the insurance industry is already worried (when is the insurance industry not worried?) because of other expensive catastrophes -- from Chile's earthquake to European storm Xynthia -- that are starting to tap the reinsurance market. That's the group of reinsurers whose business is to insure insurance companies, like the ones who insure Florida homes.
A Dow Jones/Wall Street Journal story headline sums it up nicely: Insurers Brace For Disaster Impact On 2010 Earnings. What's so surreal in Florida is that last year was the lightest hurricane season with the fewest storms since 1997. And yet the property insurance market remains a mess with State Farm (after threatening to leave the state) cutting back its coverage dramatically and a crop of much smaller Florida insurance companies struggling with low capital levels and weak balance sheets.
Granted, it seems every year we're told to prepare for the Worst Hurricane Season Ever. But there is reason for concern.
A report card issued by the Competitive Enterprise Institute gives state-by-state letter grades based on two questions:
- How free are consumers to choose the property and casualty insurance products they want?
- How free are insurers to provide the property and casualty insurance products consumers say they want?
Guess what grade Florida gets? An F? You're close. An F-. And that's using 2007 data, when the economy was far rosier than today.
So the picture is not pretty. Florida insurers are teetering due to heavy state regulation, natural disasters in other locations and the economy.
One thing you can do -- check your Florida property insurer's credit rating at the AM Best web site. Beyond that, I guess we will all see what happens later this year. Or move to South Dakota.