From RiskProf, writing on the effects of regulation in the Florida insurance markets:
Everyone forgets that insurance is a voluntary business. If conditions are harsh or allowed prices are too low, then insurers will retreat. Further by keeping prices too low during the early 2000s it exposed consumers to massive rate increase after the 2004 hurricanes. If the insurers were allowed to price at proper levels before, rates would still be higher, but the shock of 50-100% rate increases would be eliminated.
It’s an excellent point, although I wouldn’t be surprised if part of the blame for recent increases in homeowners insurance (and, to a lesser extent, property insurance in general) lies with insurers having been myopic in the past.
While the regulators may not have been willing to permit fully-loaded rates to have been approved, I would submit that there are some insurers in the marketplace who didn’t want to charge fully-loaded rates, either due to being unaware of what appropriate loads are, or by looking for short-term profit by attempting to make the top-line numbers (written premium / policy counts) as large as possible.
But on the regulatory aspect, I should point out that, at least from my mostly excess and surplus lines perspective, I love Florida right now. The lines I work with are mostly unregulated; and with other players in the market having spent time licking their wounds, and investors willing to supply capital given the opportunity to make a good return (albeit with nontrivial risk), the E&S market in Florida is such that we can get attractive returns given the risk.
Therefore I love doing business in Florida…at least as long as my aggregations don’t get out of hand, and as long as I don’t have to get approval for my rates.