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It Doesn't Pay to Write Homeowners In Florida

February 2000 - Since Andrew, Florida insurance agents have lamented their loss of entire books of homeowners business due to takeout policies of the FRPCJUA and the FWUA.

No one says it any better that Joyce Piper of Migliore Insurance Agency in Hallandale.

The letter from Tower Hill, shown above, is not an isolated occurrence, but rather a confirmation of the anti-agent procedures put in place by the Legislature, the Department of Insurance and the insurance companies.

A company taking business out of the FRPCJUA is required to pay the producing agent a commission equal to the company's existing commission schedule, for the balance of the take-out year. The business then belongs to the take-out company and the producing agent gets nothing. Some companies are paying as little as 7.5 percent.

A provision of the law allowed the take-out carrier to appoint the producing agent so they could continue to service their business, but it was not required.

As a result, few companies elected to follow that route. Instead, many chose to service the business in-house, or simply assign the policies to a single servicing agent.

The Tower Hill letter, dated Feb. 17, said, "In May of this year you will receive a commission check for policies that you placed in either the FRPCJUA or the FWUA that were subsequently selected/removed by Clarendon National Insurance Company as a part of the June 1999 takeout." It said the commission check will represent one year's commission ... less commissions previously received, less commissions on cancellations, plus or minus commissions from endorsements.

The letter announced that policies were being assigned to a Clarendon/Tower Hill agent and the producing agent's name would not appear on the declaration page if the policy was written after Dec. 1, 1999.

Paul Schwend, an agent from Callahan, Florida, lost $200,000 in homeowners premium to a take-out company, and that company refused to appoint him. At the paltry JUA commission level of 10 percent, that loss in business represents an income loss of $20,000 per year to this family-owned agency.

As the RPCJUA has been depopped, much of the wind exposure has been moved to the FWUA as companies write ex-wind in 29 of Florida's 35 coastal counties.

Now, the bloated FWUA is making efforts to move much of its exposure back to the voluntary market.

In this move, the agents will take another hit.

The FWUA takeout program encourages companies to cherry-pick wind storm policies if they will write the underlying coverage, too.

The agent who produced the ex-wind policy and placed the wind exposure in the wind pool loses both policies and there is no provision for the agent to receive any compensation on the pirated business.

The PIA was been working hard on the commission issue but is having trouble getting corrective legislation in the hopper for this legislative session.

From our view, the whole take-out process is nothing short of grand larceny. To allow companies to take an agent's business, receive a bonus from the state for doing so, and being allowed to steal the agent's first year and renewal commissions, is a joke, a bad joke.

It's time that legislators stop the rape of Florida's insurance agents.

As independent agents we work hard to get affordable coverage for our consumer-customers. We work hard to underwrite the business so our companies can make a profit. It seems only right that we be allowed earn adequate commissions from our labors.

Joyce Piper has framed the question perfectly, "How long are we going to sit still for this crap?"