Sep 23

FAIR Honors Locke Burt’s Leadership in Developing Solutions that Improve Florida’s Home Insurance Market

Consumer Advocacy Group Presents Security First Insurance Chairman and President with Lifetime Achievement Award 

Tampa, Fla. (September 17, 2014) – The looming and ever-present potential for catastrophic weather. A challenging regulatory environment. Premium affordability. These challenges, in addition to a diverse and vocal group of constituencies, have caused Florida to become one of the most volatile property insurance markets in the world, especially after Hurricane Andrew wreaked havoc on the state in 1992. Since that time, W. Lockwood “Locke” Burt has worked tirelessly – and mostly behind-the-scenes – to help shape policy that provides for a stable and competitive home insurance market in Florida. Consumer advocacy group Florida Association for Insurance Reform (FAIR) recently paid tribute to Burt’s efforts by honoring him with the organization’s Lifetime Achievement Award during the organization’s Second Annual Awards Dinner and Gala held in Tampa, FL.


A Lifetime Commitment to Improving Florida’s Home Insurance Marketplace

In addition to developing legislation to improve the safety of Florida families and children, during Locke Burt’s 12-year tenure with the Florida Senate, he is credited with helping Florida navigate its way out of a home insurance market that was left in shambles after Hurricane Andrew. Respected for his ethics, candor and ability to work with fellow legislators on both sides of the aisle to improve life for Floridians, he counseled state leaders and helped create a viable and healthy private homeowners insurance market where Floridians were provided more options and sound insurance protection.


Raised in insurance and with a nearly 100-year family history in the industry, he began Security First Insurance Company shortly after leaving the Senate. As chairman and president of Florida-based home insurance carrier Security First Insurance, Burt continues to recognize that effective legislation is critical to stabilizing Florida’s homeowners insurance market. He remains very active in providing feedback, guidance, and proposals to help shape legislation that benefits all Florida insurance consumers.


His efforts to improve Florida insurance laws have contributed to creating an environment where insurance premiums can prudently be reduced. Burt’s company, Security First Insurance, was among the first to pass these reductions on to Florida consumers by lowering homeowners insurance rates. In 2013, Security First Insurance reduced its homeowners insurance rates by an average of 9.3 percent statewide. This was followed in 2014 by a further reduction of 4.7 percent.

“I’m delighted to receive this award from FAIR,” said Burt. “I’ve been impressed by FAIR’s ability to bring together a diverse group of individuals representing public adjusters, trial lawyers, insurance companies and consumers to develop and advocate for the passage of common-sense legislation to improve the homeowners insurance marketplace in Florida. I look forward to working with them in the future to continue this good work.”


“Locke’s contributions to the property insurance public policy debate are unmatched.  He has both the credibility and integrity to promote policy that is best for Floridians overall, not just for the industry,” said Jay Neal, President and CEO of FAIR.  “Even though this is a lifetime achievement award, we look forward to many more years of his active participation in improving the market and providing the best service and options to Florida insurance consumers.”


Locke and Ann Burt with FAIR Lifetime Achievement Award



About Florida Association for Insurance Reform (FAIR)

FAIR is a non-partisan, non-profit educational organization that works to educate Florida consumers and insurance industry stake-holders about the effects of insurance public policy. Unlike other organizations that represent specific constituencies, FAIR works with all constituencies to facilitate ongoing dialogue and transparent communications. FAIR believes that there is a solution to every insurance problem that both promotes a robust insurance market and also protects consumers and policyholders.


About Security First Insurance

As a Florida homeowners insurance company, Security First Insurance provides homeowners, renters, condo unit owners, and dwelling fire insurance to nearly 190,000 customers located throughout Florida. The company is nationally recognized for developing award-winning innovative technology designed to improve the customer experience and streamline catastrophe response. Security First Insurance has been assigned a Financial Stability Rating® (FSR) of A, Exceptional, from Demotech, Inc. and is strongly committed to improving Florida’s homeowners insurance market and supporting initiatives that protect residents and communities of the Sunshine State.

Sep 23

Weiss Ratings Critical of Florida Property Insurance Market Discredited

A recent article from Reuters reported that Florida’s property insurance market may be an “accident waiting to happen.” An unbiased and balanced assessment of the market proves that this is simply untrue. The Florida property insurance market as a whole is strong, well regulated, and fully capable of paying claims when disaster strikes. The Reuters article not only misstates key facts but also builds a narrative based on financial ratings from Weiss Ratings, a Jupiter, Florida Company that uses incomplete models and has a dubious history that includes multiple run-ins with the Securities and Exchange Commission.

There are three substantive reasons that Weiss ratings of Florida’s property insurance market have no credibility. Every year in advance of hurricane season, property insurance companies in Florida must prove to regulators and rating agencies that they have the financial wherewithal to pay claims, even in the worst of circumstances. Demotech, the premier rating agency for Florida property companies, requires them to have the ability to pay claims from a 1:100 storm, a 1:50 storm, a 1:30 storm plus an additional event—all in the same year. To put this into perspective, consider that Hurricane Andrew was a 1:35 year event. There is no way that even the nation’s largest insurance companies could meet this high financial bar without buying reinsurance to spread the risk.   Reinsurance costs are roughly half of total premium dollars, the reason that Floridians pay the highest property insurance rates in the nation. Weiss does not review these very important reinsurance treaties. To rate a Florida insurer without undertaking a thorough review of its reinsurance treaties is like estimating the distance a car can travel by examining its color but not checking the fuel gauge.

Second, the Reuters article calls Weiss “a national agency with a reputation for tough ratings.” At first blush, this seems like a great thing for consumers. But when you look closer, you see that Weiss gives almost all companies low ratings. State Farm of Florida is rated C- (recently upgraded from D). JP Morgan Chase currently has a D rating from Weiss. Bank of America and Wells Fargo are only slightly higher with D+ ratings. It’s easy to claim that your record of predicting failures is good when you claim that virtually every company is vulnerable. The Reuters article calls Weiss’ track record at predicting insurance company failures “close to the mark” because it assigned them low ratings a year before failure. It does not mention that two of the failed Florida P&C companies actually had higher Weiss ratings on the date that they failed than from the year before, while only one was downgraded over the same period.

There is a third practical reason that Weiss ratings are irrelevant to the property insurance market, not just in Florida but nationally. Those homeowners who have a conforming mortgage must have homeowner’s insurance policies from companies with ratings sanctioned by Fannie Mae and Freddie Mac. Freddie and Fannie guidelines recognize Demotech, A.M. Best, and S&P, but not Weiss. Any company relying solely on a Weiss rating to write property coverage would simply go out of business.

Sadly, this may be more than just a matter of an incomplete or different rating philosophy. Some suggest that Weiss issues doomsday scenarios for one reason and one reason only—to pedal financial advice in the form of pricy newsletter subscriptions. It’s an old school sales technique that if you can scare someone badly enough, you can get them to buy a “cure.” And it is part of a business model that has more than once landed Weiss in hot water.

In 2006, the U.S. Securities and Commission (SEC) settled administrative proceedings against Weiss Research, Inc., Martin Weiss, and Lawrence Edelson (a long-time Weiss employee) for “violations of the Investment Advisers Act of 1940 in connection with their operation of an unregistered investment adviser and the production and distribution of materially false and misleading marketing materials.” The settlement paid by Weiss was over $2.1 million dollars. This was not the first brush with the SEC. According to a 1992 New York Times article calling Weiss the “Bad Boy of Insurance Ratings,” in 1972 Martin Weiss was cited by the SEC for “promotion of unregistered securities” and banned from the industry for four months.

Weiss’ troubles with the SEC have no direct relationship to its ratings of Florida property and insurance carriers. However, it is relevant information to have when considering whether the ratings are credible.

During the 22 years since Hurricane Andrew after which large legacy carriers started to shed their 95% of the property insurance market, Florida has built a strong domestic property insurance market that now writes over half of our market. There was no operating manual to guide state regulators and credible rating agencies through this remarkable transformation. There were, and will likely continue to be, bumps in the road. But overall the system is working.

FAIR’s mission is to help ensure that insurance consumers receive accurate information to make informed decisions about coverage options from companies that will be willing and able to pay legitimate claims. We have no choice but to call out anyone who would scare Florida insurance consumers with a motive that appears to be nothing more than a cynical ploy to sell financial advice.

Aug 15

Lloyds of London subsidiary pulls out of Tampa Bay flood insurance marketplace, but that’s OK

flood insurance3

A subsidiary of one of the world’s largest private insurance companies, The Flood Insurance Agency, will no longer be writing flood insurance policies in several Tampa Bay area counties including Pinellas.

That’s OK though, according to a local insurance guru.

“One division of Lloyds of London doesn’t dictate the entire market,” Jake Holehouse of Holehouse Insurance said.

That means there are still plenty of Lloyds of London-backed private flood insurance options for homeowners looking for affordable coverage.

Holehouse attributes a fairly open market to legislation introduced by State Senator Jeff Brandes that created a framework for private companies to start writing flood insurance policies in Florida. Prior to the bill’s passage, it could take more than a year for a private company to get through the regulatory process to be approved as a flood insurance provider. Under the Brandes bill, that process is more manageable to private insurers.

“When you have one of the largest insurers in the world having written hundreds, if not thousands, of policies it shows you what a demand there is for private market interests,” Brandes said.

Brandes introduced the bill amid concerns about rising flood insurance costs within the National Flood Insurace Program under the 2012 Biggert Waters Act.

Under that bill, rates were set to rise 18% per year for homeowners and up to 25% per year on second homes. The effects could have crippled the housing market in flood-prone areas.

Congress mitigated the effects earlier this year by postponing for four years mandatory rate hikes aimed at making the NFIP solvent. During that time, the Federal Emergency Management Agency is supposed to come up with a plan to make premiums more affordable.

By expanding the Florida flood insurance market to private insurers, the effects of Biggert Waters were further mitigated.

Jay Neal is the president and CEO of the Florida Association for Insurance Reform, or FAIR. He agrees homeowners are no worse off now that The Flood Insurance Agency has pulled out of writing policies in Hillsborough, Pinellas, Sarasota, Manatee and Pasco counties.

Losing that option could even be a good thing. Lloyds of London is what Neal calls a surplus company.

“Unfortunately what that often means is you’re just not getting great coverage,” Neal said.

For example, a homeowner filing a claim could be subjected to reduced coverage and high deductibles which could make the policy nearly moot.

Instead, Neal thinks the NFIP still needs reform. One of the key ways the program can be improved is by spreading risk. Florida has been a donor state, meaning ratepayers pay for policies without filing many claims.

However the downside of that could be higher deductibles. Regardless, Neal expects the flood insurance issue in Florida is on its way to better times.

Aug 15

Please post your comments on credit ratings affecting insurance rates.

People with poor credit scores in some states pay nearly twice for homeowner’s insurance. Poor credit can result from illness, job loss, and other factors. Is it fair that they should have to pay higher premiums because of bad luck?

Please sound off on this un-FAIR treatment insurance companies use!!! Click the link to Post Your Comments.

Aug 12

The 5 most common homeowners insurance shortcomings


PropertyCasualty360 News Flash
August 12, 2014
By Tim Sprinkle,
The 5 most common homeowners insurance shortcomings: Are your clients covered?
By Tim Sprinkle,
The ‘good’ news? If you’re underinsured you’re far from alone.…Read more
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