Citizens in Florida should watch the latest insurers’ rate requests closely, as it is going to affect everyone. At least one large insurer (Allstate Floridian) has already been denied a rate increase – more denials are going to force carriers out the door, reduce competition, and result in higher rates anyway.
Allstate highlights the issue in the fine print:
It’s important to note that Allstate Floridian Insurance Company and Allstate Floridian Indemnity Company are separate and distinct companies from each other and from all other companies in the Allstate group.
Why? Because it gives them protection in case of more catastrophic losses – the option of walking out of the market is better than bankrupting the rest of the company.
Politicians in Florida may think they are doing a good thing for consumers by artificially keeping rates low. But, the less choice the citizen has, the less risk is spread around, and the more rate increases will flood in. Continued denial is just delaying the inevitable.
Markets work, given the leeway to. Players should embrace them, rather than try and control them. Meanwhile, Floridians need to come to grips with the fact that they live in a dangerous place, and they can’t expect someone to carry their risk, at below cost, forever.