Why You Shouldn't be Upset With All Florida Homeowners Insurance Companies

Not liking Florida home insurance companies is almost a habit in the sunshine state. After all, many companies bailed out on the state starting with Hurricane Andrew - something that has continued to this day. After the hurricanes of 2004 and 2005, more companies in Florida increased both their rates and the number of cancellations.

Now there are two distinct groups of homeowners insurance companies in Florida. The first group of companies consists of well known national names such as State Farm Florida, Allstate Floridian, and Nationwide Insurance Company of Florida among others. The second group consists of recently formed Florida based companies that have commenced operations in the past 15 years - many since the end of 2005.

In this brave new world of big companies leaving and new companies entering the Florida market, it is the second group of recently formed companies that we should be giving a break. Here's why:

After the 2007 legislation as passed, many of the large national companies still went after large rate increases while the recently formed smaller companies reduced their rates in response to this legislation.

It is the more recently formed companies that continue to grow their business in Florida while the well known national companies continue to cancel Florida homeowners insurance policies.

The Florida start-up companies are willing to cover more of Florida's older homes and properties along the coast - risks that the larger home insurance companies abandoned a long time ago and continue to scale back.

Finally, these newer insurance companies deserve an opportunity to grow their capital and to be allowed to expand in a responsible manner. They are our future if there is any hope of Florida taxpayers and policyholders avoiding massive special assessments that we could face if Citizens Property Insurance Corporation or the Florida Hurricane Catastrophe Fund ever come up short.

Some of the more recently formed companies have begun to expand their risks across Florida and into other states as well. Spreading out this risk is important and it will help minimize the chances of smaller companies running out of money after a large Florida hurricane.

Finally, the State of Florida needs to take a fresh look at how it approaches requests for rate increases. The system is not working correctly at the present time - the larger companies exiting the state are still receiving higher rates or smaller rate reductions than the newer start up companies that are assuming a larger portion of Florida's hurricane risk.

Companies that can demonstrate that they are growing their policy base and those that can show a track record of covering older and coastal homes should be permitted more pricing power and granted higher rate increases than the companies that are bailing out.

This is not to say that the newer start up companies are not without their own issues. They have opportunities to improve too - particularly with regards to customer service as they attempt to run with smaller staffs and use shared customer support centers.

However, the next time you are part of a discussion where hatred is being focused on all home insurance companies in Florida, be careful not to paint all of them with the same broad brush. Many of the newer companies are covering your higher risk homes, taking steps to reduce costs and your premiums, and assuming risks that used to be part of Citizens Property Insurance Corporation.

Give these newer start-up companies credit for helping all Floridians out during difficult times. The more companies like this that we can give birth to and grow into larger companies with adequate capital, the better it will be for Florida over the long haul.