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Date of Issue: April 26, 2007

Insurance: Leading companies set 'disturbing trend'

Andrea M. (Andy) Bennett, a Longboat Key insurance consultant, has been appointed to the board of the Citizens Property Insurance Corp., the state's biggest insurer. Islander Photo: Molly McCartney

A local resident and insurance consultant who has just been appointed to the board of Citizens Property Insurance Corp. says there is a "disturbing trend" in the operations of leading insurance companies: They’re not much interested in insurance.

"They would rather be in other lines of business that make more money rather than insuring property," says Andrea M. "Andy" Bennett.

She also characterized the Florida insurance crisis as "the worst that anyone has seen ever in the history of the United States."

In an interview with The Islander, Bryant raised questions about the Florida regulation of insurance, suggesting that it might be better described as "ir-regulation" because of inconsistencies in the laws and regulations.

As a member of the board that governs Citizens, Bennett is one of eight directors responsible for running the biggest insurance company in the state and one of the largest in the nation.

Citizens, the state’s insurer of last resort, has more than 1.2 million policies, including 22,176 in Manatee County. Many of the Manatee policies provide coverage for residential and commercial properties on Anna Maria Island.

Bennett has worked in the insurance field for a quarter century and has held several top government jobs. In the mid-1990s, she served as chief executive officer of the Florida Property and Casualty Joint Underwriting Association.

A native of Montana, Bennett served three terms in the state legislature there and was later elected Montana State Auditor, a position that made her responsible for the state payroll, insurance and securities regulation.

Bennett and her husband moved to Florida about 12 years ago and now live in a Cortez condominium, only a short distance from her office in the Whitney Beach Shopping Center on Longboat Key. She is the founding president of A.M. Bennett and Company, which specializes in corporate, regulatory and legislative matters for all lines of insurance.

As a member of the Citizens board, she is entitled to reimbursement for expenses, such as travel to board and committee meetings, but no salary.

Here is a condensed version of the Islander interview with Bennett.

Q: What do you hope to achieve as a member of the Citizens Insurance board?

A: Well, being a free-market person, I am hoping we will be able to reduce the number of policies in Citizens and it will become just be a safe place to hold policyholders until the market comes back.

Q: How long do you think that will take?

A: It isn’t going to happen overnight. But I expect to see things happen within four or five years. Already there are speculators that are trying to set up insurance companies, but that isn’t where I want our policies to go. I want our policies to go to bona fide insurance companies that have years of experience. I don’t want the Florida one-state insurers like the Poe Financial group. Although Mr. Poe had a great amount of experience, he started a brand new company that could not get licensed anywhere else, because in order to cross state lines, you need to be a seasoned company, and I want seasoned companies from everywhere to come back to Florida.

Q: How would you characterize the insurance crisis in Florida today?

A: It is the worst that anyone has seen ever in the history of the United States.

Q: You think it is worse than a year ago?

A: Absolutely.

Q: How are you measuring that?

A: I see insurance companies that had agreed to stay in the state during these rough times are starting to turn into financial institutions rather than do the business of insurance. They would rather be in other lines of business that make more money rather than insuring property.

Q: Can you give an example?

A: Without naming a company, I will give you an example. If you take a look at the background of the president of Company X, he came from retail sales. He was a financial banker on Wall Street and he was put on the board of Company X. Then the corporation that owned Company X spins off that company into a separate organization and he becomes the president. He has absolutely no insurance experience, and what they are doing is going into other lines of insurance that are more profitable. They want you to invest your money with them in annuities and things like that. They don’t want to do property insurance. They are getting out of property insurance. They are actually handing off insurance to other companies. It is a very disturbing trend. They are not interested in insuring. They are looking to see where they can maximize the most for their stockholders.

Q: How extensive is this practice?

A: I think it is a very disturbing trend. And when you have Allstate and State Farm, the two largest insurance companies, heading in that direction, you are going to see other insurers doing the same thing, because [Allstate and State Farm] are the leaders of the pack.

Q: So what is the solution to the crisis that you see as the worst ever?

A: I really do believe that over the past 20 years that Florida has not done a very good job in insurance regulation. What would be a good word — it has been ir-regulation. Pretty much the whim of the political person in power at the time.

Q: So what is the fix?

A: Insurers have to know that there is stable insurance regulation. As long as they know what the rules are, they don’t mind playing by those rules. And in Florida, that has not been the case for 20 years, give or take a year on either side. I will give you an example. I am a former insurance regulator. I do consulting for insurance companies. But I don’t do any of my business in the state of Florida. I have a couple of Florida companies but I handle all of their business outside of Florida. They just don’t do business in Florida. Nobody wants to do business in Florida because it is not a good place.

Q: And that is because of the nature of regulation as opposed to specific regulations?

A: Yes. Companies need to know what the rules are, as well as the laws. But in Florida, your policy form will stay in the Office of Insurance Regulation for two or three years. Well, that policy form is a product they want to sell right now. They figure it may take a few weeks, maybe even three months to get the bugs worked out before putting it on the market and they will allow for that much time because that is the way it is in the rest of the country. But not in Florida. Things languish two or three years in Florida, and finally the insurers just lose interest and they don’t want to do business here. So it is not only the laws, it is the rules that designate how those laws will be carried out.

Q: Who is responsible for these delays?

A: The Office of Insurance Regulation, which is under Kevin McCarty.

Q: OIR works under the direction of the Florida Cabinet, which includes the governor. Has OIR been told to be consistent in the rules they develop as a way to implement state law?

A: They’ve been told.

Q: Isn’t it up to the Cabinet to oversee the OIR?

A: Yes, but it is relatively new for the Cabinet, so they are still looking around and trying to figure what they are supposed to think, say and do about insurance regulations. They are starting to take it more seriously. They are starting to actually take a look at overseeing the OIR.

Q: A big part of the debate about insurance has been focused on Citizens exposure to loss in the event of a big storm, with the taxpayer as the backup. What do you think about that?

A: I am quite frightened about it. It makes it more difficult for us to go from a quasi-governmental insurance company that wants to reduce what we are doing.

Q: Describe your experience this past year in getting insurance for your business, which is located on a barrier island.

A: I did have a terrible amount of trouble. I was calling everyone I knew in the insurance business: CEOs, underwriters, anyone to help me out, because I had a package policy at the $1 million level, but I needed to up my coverage to $2 million to be on a job that I was working on. I was finally able to find it. But let me tell you, I really did beat the bushes.

Q: At what price?

A: I had two offers. One was $4,000 from a surplus lines company and one was $500 from a standard licensed insurer. So I took the one for $500. This was a policy for contents of my office.

Q: What do you hear from friends and colleagues about your appointment to the Citizens board? Are they saying condolences or congratulations?

A: It has been pretty much congratulations. And my response has been, "Thank you, I think."

Note: If you have an insurance story to share with others about your experience with rate hikes, rate reductions, rate refunds or other insurance issues, please send a note to The Islander by e-mailing or