Columnist Targets Bermuda “Price-Gougers”
Never mind mortgage payments and taxes. For Florida homeowners and businessmen, property insurance will soon become the largest recurring expense thanks, in part, to “price gouging” by Bermuda reinsurers, says a Sarasota columnist today [Jan.7].
Eric Ernst was commenting on a recent series of scathing “Sarasota Herald-Tribune” articles on the role Bermuda reinsurers play in setting insurance prices in hurricane-prone Florida.
Mr. Ernst echoes the conclusions of the series, claiming the price of Florida insurance coverage is being legally but unethically manipulated by Bermuda firms the newspaper has quoted critics as calling “the almost-pirates of the almost-Caribbean.”
“When we pay for home and business insurance in Florida, much of that money does not go to the company from which we buy our premiums,” he argued in a hard-hitting column. “It goes to reinsurers that sell hurricane protection to insurers.”
“These companies, concentrated offshore in places such as Bermuda, charge exorbitant rates and operate with little regulatory oversight.”
The justification for what Mr. Ernst called ”price gouging” comes in part from a “bogus” hurricane risk model used by California-based Risk Management Solutions and the industry standard in Bermuda developed by four scientists, two of whom now admit to having qualms about its accuracy.
“In the last four years, payments to reinsurers have drained $15 billion from Floridians.” he said. “That money could have doubled the state’s publicly run catastrophe fund and lowered premiums 20 percent.
“Instead, despite five years without hurricanes reaching the peninsula, rates have doubled or tripled in coastal areas. They’re about to go up another $718 million statewide.”
Association of Bermuda Insurers & Reinsurers CEO Bradley Kading has rejected the newspaper’s claims, saying the island is a reliable and responsive partner to Florida insurers.
A Florida consumer watchdog group has also said the newspaper’s ongoing attacks on Bermuda reinsurers are misdirected and unfair.
