Sci-fi author William Gibson's famously said, "The future is here; it's just not evenly distributed yet," and that line seems to apply to insurance. Often, that observation suggests promise—we can see innovation in various spots that will surely percolate through the whole industry. But sometimes it doesn't—in particular, as we see natural catastrophes, abuse of the legal system and other problems hit major markets and can be sure the problems will spread.
To try to get a glimpse of what may be in store for the rest of us, I connected for this month's interview with Michele Coolidge in southern Florida. Michele, who has been actively involved for years with the CPCU Society at The Institutes, is the risk manager for the Marsh McLennan Agency, Bouchard region.
The picture she paints isn't entirely grim, but she says, "It's just really tough out there."
Perhaps coming soon to a market near you....
Michele says premiums for homeowners have risen so much that, "in an effort to save money, people are taking on risks that they may not be able to afford if something happens. They might have deductibles they won't have the cash to cover. And I think the problems are spreading."
California and Louisiana leap to my mind as deeply troubled markets for homeowners, but Michele said the problems are much broader.
"A friend of mine in Iowa told me that six homeowners carriers went under there," she said. "They're calling Iowa the new Florida. And you don't want to be compared to Florida when you're talking about homeowners insurance. It's not just hurricanes. It's the wildfires and the tornadoes and all this stuff that's happening everywhere."
On the plus side, Michele said legislative reforms in Florida are starting to help—the state had suffered for years from laws that gave attorneys and roofing contractors almost carte blanche to go after insurers, irrespective of whether a home had actually suffered damage.
She also said that carriers are communicating more with policyholders about ways to harden their properties.
There's more, too, including about how her agency is coping with the fact that "there are a lot of new people in our industry. On the one hand, this is fabulous. But there's a lot of bench strength and old knowledge that is not here any more."
I think you'll find the interview interesting. The future is here in many ways, for good and ill, and it seems to be hitting Florida early.
Cheers,
Paul
