Csiszar tells agents major shift essential to entice carriers to Florida

Insurers look at Florida’s government as a heavy-handed, intrusive, oppressive regulatory regime that does more harm than good to property insurance markets.

According to Ernie Csiszar, president and CEO of the Property Casualty Insurers Association of America, Florida’s government and legislators will have to undertake a major shift in their approach to this market if they wish to entice insurance companies back to the state.

Csiszar recently spoke to Florida agents in Orlando, Fla. during the Florida Association of Insurance Agent’s 102nd Anniversary Convention. He began by praising agents.

“The heart of our industry is not the carrier, it is not the reinsurance company, it is the agency force and the loyalty and dedication of the agency force,” Csiszar explained.

Trust-based system
“This system, no matter what you hear, will survive and thrive based on trust, relationships, friendships, service and the true value an agent provides to his customers,” Csiszar said.

After singing the praises of agents, the insurer executive blasted the state’s politicians, whom he maintained have driven the property insurance market into crisis by relying upon government rather than market-based solutions to problems.

“I am in a state to which every tourist in Europe, North America and Canada flocks. Tom Gallagher told me some time ago that Florida has 1,000 new residents a day,” the former South Carolina regulator told agents. “You are such an attractive state, with low taxes, values to eat and sleep, yet you are driving insurance companies away,”

He continued, maintaining that what he said was the state’s Soviet-like government is at fault for scaring away insurers.

“It bothers me because Florida is the perfect example of how the capitalist system is suppos-ed to work, except when it comes to insurance,” Csiszar offered. “When a company wants to write insurance in Florida, it feels like we are working and dealing with the bureaucracy in the Soviet Union, and believe me, I have vivid memories of those types of bureaucracies.”

Csiszar was born in Romania and has said his early years of life behind the Iron Curtain have had a tremendous impact on him.

Cutting to the quick, Csiszar maintained that Florida is one of the worst in the nation for insurers. “You are simply not a welcome state. From a regulatory standpoint Florida is one of the worst states to deal with. You have forgotten about the fine line that exists between what government does well and what the markets do well,” he maintained.

Run to the government
“There is a role for markets and there is a role for the government, instead every time you have a problem in Florida, do you run to the market? No, you run to the legislature,” he added.

Csiszar said he recently sat in Bermuda with one of Florida’s legislators, whom he described as “a wonderful man, a bright man with a very appealing personality, a funny guy.”

But he did not find the man’s politics amusing.

“He took great pride, and deservedly so, that last year in the 11th hour, almost the 12th hour, of Florida’s spring legislative session, you managed to pass a 190 page insurance bill,” Csiszar said. “I looked at him and said, ‘You know when I hear that, I wouldn’t thump my chest, I would duck. When I hear about 190 pages to solve a problem legislatively I say, ‘Uh-Oh, somebody is out there creating more problems.'”

The answer, he insisted, is not in legislation.

“The problem is only going to get aggravated,” he predicted. “When is the state going to realize that the true solutions to your crisis lies on the market side of things? They don’t lie with the government.”

Supply and demand
Csiszar insisted that the laws of supply and demand will always assert themselves.

“There are a lot of these things that are good and make Florida a more appealing market,” he said. “But they are not going to solve your problems because what you have got, even with your all-powerful Florida legislature, can not overrule the laws of supply and demand.” Marx, Lenin and Stalin who sought to defy these laws also failed, Csiszar argued.

“Demand is increasing not only because you have a larger population but because you have also got bigger houses, more houses, higher-valued houses, higher construction costs and more storms,” Csiszar explained. “Come on, the demand has gone up, and by the way, the quality of your policies has gone way down.”

Csiszar told the audience that the quality of coverages and capacity for even non-hurricane related risks has deteriorated and the future does not look better unless things change.

“Until you let that little thing in the middle between supply and demand called price arrive at the kind of balance that has to exist between supply and demand, it isn’t going to work,” the insurer trade executive cautioned.

“You can write law after law, hold legislative session after legislative session, and hold special sessions one after another, but it is not going to work unless you stop suppressing the prices here in Florida,” Csiszar concluded. “Until you get away from this price suppression, and allow that price to reflect the real underlying risk, or at least come close, and allow that judgment call to be exercised by the market, and not by the legislature, you are going to face this issue over and over for years to come with the crises just getting worse and worse.”