Being angry at Florida home insurance companies has become a popular activity since many large companies started exiting the state after Hurricane Andrew - a pattern that has continued thru today. After Florida's 2004/2005 hurricanes, companies significantly increased both their rates and their insurance cancellations



Now there are two distinct groups of homeowners insurance companies in Florida. The first group of companies consists of well known national names such as State Farm Florida, Allstate Floridian, and Nationwide Insurance Company of Florida among others. The second group consists of Florida based regional companies that have started doing business in the state over the past 15 years - many since the end of 2005.

In this brave new world of big companies leaving and new companies entering the Florida market, it is the second group of recently formed companies that we should be giving a break. Here's why:

After the 2007 legislation, it was the recently formed companies that actually reduced their rates in response to this legislation while many of the national companies stubbornly pursued rate increases.

It is the more recently formed companies that continue to grow their business in Florida while the well known national companies continue to cancel Florida homeowners insurance policies.

The Florida based start-ups are more willing to consider insuring older Florida homes and properties near the coast - risks that the national companies abandoned years ago and continue to shed.

Finally, these newer start up companies deserve a chance to build up their capital reserves and to expand responsibly. They are our future if there is any hope of Florida taxpayers and policyholders avoiding massive special assessments that we could face if Citizens Property Insurance Corporation or the Florida Hurricane Catastrophe Fund ever come up short.

Some of the more recently formed companies have begun to expand their risks across Florida and into other states as well. Spreading out this risk is important and it will help minimize the chances of smaller companies running out of money after a large Florida hurricane.

Finally, from a policy perspective, the State of Florida needs to take a new look at how it considers request to increase rates. The system is not working correctly at the present time - the larger companies exiting the state are still receiving higher rates or smaller rate reductions than the newer start up companies that are assuming a larger portion of Florida's hurricane risk.

Companies that can demonstrate that they are growing their policy base and those that can show a track record of covering older and coastal homes should be permitted more pricing power and granted higher rate increases than the companies that are bailing out.

This is not to say that the newer companies are perfect. They have opportunities to improve too - particularly with regards to customer service as they attempt to run with smaller staffs and use shared customer support centers.

However, the next time you are part of a discussion where hatred is being focused on all home insurance companies in Florida, be careful not to paint all of them with the same broad brush. Many of the newer companies are covering your higher risk homes, taking steps to reduce costs and your premiums, and assuming risks that used to be part of Citizens Property Insurance Corporation.

Give these newer start-up companies credit for helping all Floridians out during difficult times. The more of these companies that can be created and built up with a decent base of premiums and capital, the better it will be for all of Florida in the long run.