PIA Panelists Discuss Preparing for Hurricane Season

Florida’s insurance industry survived last year’s record-breaking hurricane season and is prepared to help homeowners weather what may come this year. That was the message during a recent web broadcast carried live throughout Florida, produced by the Professional Insurance Agents of Florida.

The forum, Florida’s Markets: After the Storms, was a two-hour panel discussion on the impact of last year’s four Florida hurricanes on the insurance market, and prospects for the next Atlantic storm season which begins June 1 and ends November 30.

Nearly 1.7 million insurance claims, representing $21 billion in losses, were filed after four hurricanes inflicted damage throughout Florida last year. Last year’s record-breaking onslaught of storms is followed by a potentially ominous forecast for this year: experts are predicting the formation of more than 13 named Atlantic storms, seven achieving hurricane strength and three of them becoming major hurricanes.

“We set a record in 1992 with Hurricane Andrew,” said Sam Miller, the executive vice president of the Florida Insurance Council, one of the panelists on the PIA forum. “It was the most expensive hurricane in world history. We set another in 2004. That hurricane season surpassed Hurricane Andrew.”

“We survived it, we settled our claims, we are still here,” Miller said. “No other state could do that and still have a homeowners market. We’re ready for whatever happens in 2005 – we just hope it is not four of ‘whatever happens.'”

Last year’s four Florida hurricanes have renewed interest in an idea that has been talked about in Congress for more than a decade: mechanisms for natural disasters from a national perspective. Several proposals have been introduced in recent years. So far, none has passed. After the 2004 hurricane season, Rep. Ginny Brown-Waite (R-Florida) introduced H.R. 846, the Homeowners Insurance Availability Act of 2005. Six of the current 13 cosponsors of the legislation are from Florida.

“PIA supports natural disaster legislation on a national level that partners with the states and private enterprise–but it must be a true partnership,” said PIA National executive vice president & CEO Len Brevik, moderator of the panel. “We have two goals. First, that such legislation opens markets in underserved communities; and second, that it ensure solvency in the industry overall. That’s our message when we go to Congress.”

Brevik added that PIA also supports four principles that the association would like to see incorporated in any natural disaster legislation:

1. It should support the availability, affordability, and most importantly, the stability of the P&C market in catastrophe-prone areas;

2. It should cover both residential and commercial losses;

3. It must not interfere with or in any way usurp state regulation of insurance;

4. It must not compete with the private market sector to provide capacity.

Panel participants expressed optimism – tempered by wariness about what the 2005 hurricane season may bring.

Bob Ricker is executive director of Citizens Property Insurance Corp., the state-run insurer of last resort available to Floridians who cannot find homeowners coverage in the private insurance market. He said one change his company will make this year is involving agents in the claims process. “What I think most important is to include the agent in the adjustment process. This is something that we didn’t do in 2004, and it ended up putting us at the top of the complaint list with the Florida Office of Insurance Regulation.”

Rick Hardy, president and CEO of Florida Family Insurance Company, which has more than 550 agents in Florida, said he personally witnessed agents going the extra distance for their insureds after last year’s storms, and he was gratified.

“I had the privilege of bring out in the field and visiting agents and there were just absolutely heroic stories,” Hardy said. “In one agency all the doors were open, the windows were open, there was no power, everybody was running around barefoot and in shorts, they had generators out on the lawn with lines into the agency running the computers and the phones. They had no lights or air conditioning and their teenage kids were busy putting tarps up on the roof. But they were staying there to help their customers report claims.”

“That was happening all over the storm-affected areas,” Hardy said. “It was a privilege to watch them and we learned a lot about our agency force from those storms and almost all of it was good.”

Participants in the panel included Bob Ricker, executive director of Citizens Property Insurance Corp.; Sam Miller, the executive vice president of the Florida Insurance Council; Dr. Ray Spudeck, senior research economist with the Florida Office of Insurance Regulation; Kevin Milkey, executive vice president of American Strategic Insurance Co.; Perry Cone, senior vice president and general counsel with First Floridian Insurance Co.; Rick Hardy, president and CEO of Florida Family Insurance Co.; and Jim Wurdeman, president and CEO of Poe Financial Group, Inc.

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA will celebrate its 75th anniversary in 2006.