Hyatt Brown on State Farm exit, Citizens rates
Here's some insight from Brown & Brown CEO Hyatt Brown, a longtime business insurance executive and Florida influential. He made his remarks in a conference call this week with analysts discussing his company's quarterly earnings. (Photo: St. Petersburg Times files.)
Analyst Mark Hughes of SunTrust Robinson Humphrey asked this of Brown: "What do you think the effect in Florida will be from a State Farm pulling out and then what are the prospects for Citizens Property Insurance raising rates in 2010?"
Here's Hyatt Brown's response (edited for clarity. Here's the complete conference call transcript):
"Well number one they, the pullout of State Farm has caused a lot of turmoil. We are getting, as everybody is, lots and lots of phone calls from irate State Farm policy holders. We do have some capacity although a lot of that business is going to go, by definition, into some of the takeout companies at substantially higher rates than what are being currently charged by State Farm.
"Now, currently the situation is that we think that Citizens is going to raise rates 10 percent in 2010, 10 percent in 2011 and 10 percent in 2012.
"That’s not done yet so we’ll see. Now there is a substantial angst now occurring in Florida among the bankers of Florida... there is a substantial fear that by having more and more homes and other properties go into Citizens and the fact that the state currently probably can’t raise the money to pay for a bad hurricane... then what happens to the banks who are kind of holding the bag out there waiting for someone to pay them? So we have a little bit of an angst going on."
-- Robert Trigaux, Times Business Columnist