Can you think about the scene within the Florida legislature the place insurance coverage trade lobbyists have been presenting drafts of latest legal guidelines to Republican lawmakers? It should have gone one thing like this:
‘These laws will allow us to not pay claims, or if we have to, we will have a lot more leverage to pay less because nobody will be able to afford a lawyer. And, if they do hire a lawyer and sue, it will cost them a lot more, and we will make them go through more hoops that exist nowhere else in the country. We will take away almost any chance of bad faith lawsuits so we can deny a lot more claims. We will not have to offer as much coverage. And the best, we will get these laws passed and not promise to lower any premiums. Indeed, the rates may go up!’
It doesn’t take a monetary genius to determine that taking individuals’s cash and by no means paying what’s owed on insurance coverage claims may be very worthwhile. The geniuses who handed these legal guidelines perceive that fundamental idea a lot that they’re now touting Florida as an incredible place for insurance coverage firms to do enterprise, as famous within the above video and in an article by Lawrence Mower, Amid Florida Insurance Crisis, Investors And a Senator See Opportunity:
Lured by the nation’s highest premiums and new legal guidelines making it tougher to sue insurance coverage firms, buyers see a possibility in Florida’s beleaguered insurance coverage market. Current and former state officers and different observers mentioned they’re receiving common inquiries from potential buyers trying to make a revenue.
‘As soon as we were done with the last vote in session, I had a couple of people … including legislators, asking if I wanted to invest in an insurance company,’ Sen. Jason Pizzo, D-Hollywood, informed the state’s insurance coverage commissioner final month.
That consists of state Sen. Joe Gruters, R-Sarasota, who has pitched fellow lawmakers on investing in a owners insurance coverage firm that initiatives a 165% return on funding over 5 years.
… But Florida-based insurance coverage firms make use of uncommon monetary constructions that may permit executives to extract appreciable earnings from owners’ premiums.
A visitor weblog, Major Florida Property Insurers Paid Out Excessive Executive Compensation Packages Dividends For Years, written by Kevin Connor for the American Policyholder Association, famous that:
For years, property insurance coverage firms in Florida paid out extreme government compensation packages and inventory dividends, basically transferring earnings into insiders’ pockets as an alternative of getting ready for future years of hostile underwriting experiences as most insurers do.
… One of the few closing reviews accessible on owners insurance coverage firms is concerning the failure of Sunshine State Insurance Company in 2014. The firm reported that on account of an ‘accounting error,’ it didn’t have the required reserves and was positioned into receivership. Sunshine State was later discovered to have shifted thousands and thousands of {dollars} in funds to its guardian firm and subsidiaries, in addition to giant government bonuses whereas the corporate was on the verge of insolvency. An fascinating part of the required insolvency reviews is that the division is required to do an evaluation of the effectiveness of the Office of Insurance Regulation’s oversight of insurance coverage firms which have later failed. Some have speculated that that is the explanation why these reviews look like suppressed.
Little consideration has been paid to this side of Florida’s insurance coverage market: Insurance executives lined their pockets for years as an alternative of working the businesses responsibly and build up sufficient reserves and at the moment are pointing the finger at shoppers, attorneys, and roofers. We have seen questionable statistics typically repeated to assist this concept, however nobody has produced validation or verification.
Florida has an insurance coverage disaster as a result of Florida’s insurance coverage regulators and most of its Republican lawmakers are in mattress with insurance coverage lobbyists, as famous in How the History of Insurance Repeats Itself and Is Full of Modern Lessons Which Need to Be Acted Upon. The Republican legislature, authorities officers, and insurance coverage regulators being in mattress with the insurance coverage foyer is just not a secret. Donald Trump has known as them out on this:1
What can we do? Follow former President Trump’s recommendation—clear the swamp. Insurance lobbyists and the insurance coverage trade run Florida’s insurance coverage market. Until we get them out of the regulation and lawmaking enterprise, this can proceed to be a multitude.
Thought For The Day
Don’t spend main time on minor issues. If you discover that you just’re spending an excessive amount of time on the insignificant, you need to clear home.
—Jim Rohn