David Sampson promotes the value of a joined up approach to insuring the Floridian property insurance market.
The Florida property insurance market can be fixed. But it will take a partnership of public policymakers, insurers, and consumers willing to consider innovative approaches to reducing and transferring the risks inherent in a state in which the threat of a catastrophic storm presents itself every year.
Property insurance markets along the Atlantic and Gulf coasts of the US present unique problems for the people that live in these areas, the insurance companies who cover the exposure, and the legislators and regulators who are committed to smoothing out any market disruptions.
When markets hit bumps in the road it is often easier for some public policy makers to say that government is better suited to making insurance products available and affordable than private insurers. The concept of “government to the rescue” can lead to unintended consequences, the most important of which is the undermining of the free market system on which the US economy is built and transferring the cost of paying for future losses to consumers and taxpayers who have very little exposure to catastrophes.
We have a better chance of solving those problems when government unleashes the innovative powers of the free market rather than unfairly restricting it. These include fostering a more robust catastrophe bond market; providing guaranteed low interest loans to policyholders who opt to purchase high deductible policies; providing financial assistance to low income consumers; and offering financial incentives to build safer new homes and retrofit existing homes that can withstand the brunt of hurricanes.
“The Florida property insurance market can be fixed
All of these ideas need to be debated, tested, and allowed to work before we resort to a “government knows best” approach. Fortunately, it appears that insurers and public policymakers in Florida and other catastrophe-prone states are willing to embrace such innovations. It will not be easy. It will not happen overnight. But it can be done and insurers want to be a part of the solution.
President and CEO of the Property Casualty Insurers Association of America