February 11, 2008
Hartford Insurance, sold far and wide through AARP in Florida told the Florida Senate Select Committee on Property Insurance Accountability they will start to non-renew 27,000 homeowners policies beginning August 2008.
Tom Johnston, senior vice president and chief actuary for the Hartford Group spoke on behalf of the insurer Tuesday (02/05) in Tallahassee, representing one of five insurance companies that were summoned to the capitol this week.
Committee member Sen. John Alexander asked Johnston if an approved rate increase would persuade the company to rethink their plans to shed policies.
Johnston said it is a capacity management issue and profitability in Florida is not foreseeable over an extended period of time.
The 27,000 policyholders represent about a third of Hartford’s homeowners’ policies in Florida. When asked if the company had found another venue for the insureds the reply was “no.”
The Hartford executives revealed that the company transacted a $1 billion stock buy-back in 2007.
Ah, another gentle reminder to the politicians of Florida that:
a) Hartford Florida is a separate company from the rest of the Hartford Group.
b) The Hartford Group is a public company accountable to their shareholders not the State of Florida.
c) Capacity, manageability, and profitability are important to a functioning P&C company, whether or not a Florida politician understands the issues (or not).
What happens next will be very interesting. In Florida, AARP promises that policies bought through them (AARP is not really a P&C company, they offer the Hartford policies as a marketing arrangement) will not disappear. Since they make no guarantee about terms or price, I’m sure the cancelled policyholders will be offered something.
Apparently, insurers should keep customers on the books when the KNOW they will lose money in the long run.
Ya know, in Florida I think it’s an accountability thing: Politicians figure if another hurricane hits and it’s bad enough, the Federal government will step in and make everyone whole (don’t know where they got that idea: Katrina maybe?) SO, Florida residents should get cheap homeowners insurance regardless of the long term effect.