It seems that Florida legislators might be coming to take a few of the industry’s toys away. Seen in the Orlando Sentinel’s Political Pulse blog:
With the annual legislative session starting in March, lawmakers said they could consider fixing loopholes in last year’s law.
In one such gap, the law didn’t explicitly indicate methods insurers can’t use to predict risk and ultimately set insurance policy prices, said Sen. Steve Geller, D-Cooper City.
Insurers such as Allstate Floridian Insurance Co. and Nationwide Insurance Co. of Florida based rate increase requests last year on storm risks over the next five years instead of the customary 100 years. A special state commission approves risk prediction methods, but use of unapproved methods, such as the five-year projection, results in higher insurance rates.
Of course, it should be noted that if there’s a significant disconnect between what insurers are permitted to use and the models that adequately financially secure reinsurers use when negotiating cession rates, Florida will become an even less attractive property market.