This is from an article published in the St Pete Times on Saturday, February 12, 2011. We have not been able to find the article online as of yet. The article is written by Stephen Coddington and takes a look at the insurance issues from a more objective standard. The article entitled “Insurance industry’s excuses fall flat” begins by acknowledging that there is an insurance issue here in Florida and that studies show three out of four insureds rely on a carrier that exhibits signs of financial risk. Some private insurance carriers are so under capitalized that they may not even be able to withstand minor claims, much less major catastrophic ones. Sinkhole fraud is obviously one of the scape goats that these carriers have relied on. The article rightfully acknowledges the issues with insurance fraud but that these issues mask much of the misconduct the insurers have engaged in. During the past five years without any hurricanes touching land, the insurance companies have neglected to build their reserves and the article even points to the fact that as much as 86 percent of premiums collected end up overseas with reinsurers. The article further points to the fact that most carriers don’t want you to know that they have actually been bringing in sizable profits the past five years and those they are not have been setting up shell corporations to protect their bad debts while the parent corporation continues to make money. We have discussed this issue in past entries and it is nice to see an outside source who has noticed some of the same trends. The article ends with a brief discussion of Bill 408 and how it will virtually eliminate sinkhole coverage here in Florida. In the meantime, the insurance companies have received average rate increases of 35% while dishing out over $149 million in executive bonuses between 2006-2008.
February 14, 2011 by Morgan Barfield