November 2014

The University of Florida Gators were scheduled to play football against the University of Idaho Vandals on August 30, 2014 in what was to be the Gators season home opener in Gainesville, Florida.  The football game was initially scheduled to begin at 7:00 p.m., but due to heavy rains and lightning, the start of the game was repeatedly delayed and ultimately began around 10:00 p.m.  After the first play of the game – Idaho kicking off to the Gators – additional lightning appeared and forced the eventual cancellation of the game.  Although the two teams could have potentially rescheduled this game for a bye-week later in the season, officials from both schools ultimately decided against it.

So – all of that is nice, but what does it have to do with insurance you say?  Well, due to the financial acumen of UF Athletic Director Jeremy Foley, the Florida Gators have always maintained an insurance policy to cover any loss in ticket revenue should a game be cancelled.  Prior to each home game, the University provides its insurer, Lloyd’s of London, with an estimate of both prospective ticket sales and any potential losses.  If a game is cancelled or if the University otherwise incurs a total loss of ticket revenue for a game, the insurance carrier pays the University for this loss.

Since the football game between Florida and Idaho was cancelled, the University refunded the purchase price to all ticket holders and placed a claim against Lloyd’s of London for the revenue the University stood to make on these ticket sales.  End result?  Although the score of the actual football game ended at 0-0, the University of Florida still walked away with a cool $1,800,000.00.

 

Over the past few months, many Citizens Property Insurance policy holders received a notification that, unless they opted out within a certain time frame, their property insurance would be automatically transferred out of Citizens and into one of several small start-up insurance companies.  These newly formed property insurance carriers have been nick-named “take-out” companies because their sole source of new business is to take over property insurance policies that have been transferred out of Citizens.  This process has created a love/love relationship between Citizens and these new insurance companies as, through the transfer of policies out of Citizens and into these new start-ups, Citizens can further its goal of depopulating its customer base and the new start-ups get “free” customers without having to market for same.

Of course, all is not rosy for the actual policy holder.  As a recent report reflected, the recent crop of small, in-state property insurance companies have no record of withstanding the losses associated with a major hurricane and have not fared well with insurance industry rankings.  In fact, these new companies only average a “C-minus” rating by Weiss Ratings and 11 of these companies have failed since 2006 – without even having a major storm or hurricane to drive up the claims!  According to the new Weiss Ratings, 19 of the 48 Florida-based property insurance companies received a rating of “D-minus” or worse, which is eye-opening in light of the fact that Florida homeowners pay about $6 billion dollars a year to these companies and we haven’t had a large scale insurable event in over a decade.

The take away is that, although you may not be thrilled with the coverage or level of service that you may be getting from Citizens Property Insurance, you had better think twice about switching to one of the new take-out companies.  Despite all of its problems, Citizens does not have the failure risk of the small private companies and Citizens will always have the money to pay claims – even though it may take years to do so!