As a veteran insurance agent serving Florida homeowners, I have seen firsthand the challenges plaguing our state’s insurance market. A recent article in the Tampa Bay Times by Laurence Mower presents a skewed and incomplete view of our industry, implying that insurers are enriching investors while feigning financial distress. This narrative, unfortunately typical of sensationalist journalism, is not only inaccurate but also reckless.
Mower’s reporting relies on half-truths, cherry-picked data, and a blatant disregard for the structural realities of Florida’s insurance market. It’s a prime example of sensationalism, ignoring hard facts in favor of a clickbait narrative that fuels public anger while offering no real solutions.
The Reality of Rising Costs
I don’t need a report to tell me what many of my clients already know: insurance rates have increased, and coverage options have become more limited. This is a direct reflection of a market experiencing unprecedented strain.
Mower’s article suggests insurers are manipulating finances to justify rate hikes, but the real drivers are far more complex:
- Massive Legal Abuse: Excessive litigation has crippled the market.
- Skyrocketing Reinsurance Costs: The expense of insuring insurers has dramatically increased.
- Aggressive and Fraudulent Roofing Claims: Shady practices drive market instability.
- Market Instability: Multiple companies have failed in the past few years.
For years, the Florida insurance market has been plagued by excessive lawsuits and rampant roof fraud. Prior to recent reforms, Florida accounted for nearly 80% of all homeowners insurance litigation in the U.S., despite representing only 9% of claims. The cost of these lawsuits was passed down to every homeowner through higher premiums.
The Role of Managing General Agents (MGAs)
One of Mower’s most misleading claims is his attack on Managing General Agents (MGAs). He paints them as a tool for insurers to extract profits at the expense of policyholders. This argument is not just false but dangerously ignorant. The MGA structure is essentially the backbone of Florida’s insurance market, ensuring that private insurers can operate efficiently in an environment with extraordinarily high risk.
Why MGAs are critical:
Florida’s extreme hurricane risk makes it a financial minefield for insurers. Large national carriers have largely withdrawn from the state, leaving Floridians dependent on smaller, specialized domestic insurers. These insurers rely on MGAs for the following:
- Underwriting Expertise: Ensuring risk is accurately assessed.
- Claims Management: Providing swift and fair claims processing.
- Reinsurance Procurement: Negotiating essential reinsurance agreements.
- Policy Administration: Handling administrative and compliance duties.
Without effective reinsurance strategies, insurers would be unable to pay claims after a major storm, leaving homeowners vulnerable. The MGA structure helps attract capital, which is critical. Without the MGA system, capital would flee the state, leaving homeowners with even fewer choices.
Former Florida Insurance Commissioner Kevin McCarty has explicitly stated that MGAs are essential to keeping Florida’s market afloat. Similarly, Jeff Grady, former CEO of the Florida Association of Insurance Agents (FAIA), has warned that dismantling the MGA structure would devastate the ability to bring capital to our state.
If MGAs are overregulated or dismantled, Florida’s private insurance capacity will collapse, pushing more homeowners into Citizens Property Insurance Corporation, the state-run insurer of last resort.
Exposing Mower’s Reckless Journalism
Laurence Mower’s attacks on MGAs and insurers undermine efforts to solve Florida’s insurance crisis. His claims selectively report, ignoring key realities while cherry-picking data to fit a pre-determined narrative. He fails to acknowledge that every MGA contract is thoroughly reviewed and approved by the Florida Office of Insurance Regulation (OIR) to ensure fairness.
He neglects to mention that MGAs help keep insurers solvent and blatantly ignores the role that rampant litigation, roof fraud, and reinsurance costs have played in driving up rates. By focusing on a sensational attack on insurers, Mower diverts attention from the real issues: the trial bar’s exploitation of the legal system, the billions lost to frivolous lawsuits, the abusive and fraudulent roof replacement schemes, and the increasing cost of catastrophic reinsurance.
The Path Forward: Real Solutions
Rather than misleading narratives, we need real solutions:
- Reduce Litigation Abuse: Allow the 2022 reforms to continue to work to curb lawsuits and roof replacement schemes.
- Reinsurance Affordability Initiatives: Make reinsurance more affordable.
- Protect the MGA Structure: Resist any policies that weaken MGAs.
MGAs are not the problem. Sensationalist reporting and misguided regulatory efforts are. Allowing misinformation to drive policy decisions risks collapsing Florida’s fragile insurance market. We must work towards solutions that keep insurance affordable and available for homeowners.
Mower’s article offers no help to Florida’s homeowners. At best, it’s misguided. More likely, it’s simply naive and uninformed about business economics or the insurance industry. The narrative is misleading and undermines the very reforms that could stabilize our market, bring back coverage options, and reduce rates for Florida property owners.
As an agent, I will continue fighting for truth, transparency, and real solutions while pointing out incomplete or naive information when I see it.
Allen McGinniss is the principal of the McGinniss Himmel Insurance Agency, LLC.
