Austin American-Statesman, April 15 , 2003

Re: April 7 Asides item, "Alice in Insuranceland":

The editorial continued an unsettling trend in the reporting of insurance issues. Insurance critics often create a false impression when they lump all states and all lines of insurance into one profitability "estimate."

Insurance is regulated at the state level, and rates must reflect the actual and expected loss experience in that state alone. Profitability in each line of insurance — such as auto or homeowners — needs to stand on its own. Profits in auto insurance, for example, can't be used to subsidize losses in homeowners insurance that arise from natural disasters. What's more, hurricane-related losses in Florida can't be subsidized by homeowners profits generated in Minnesota.

Insurance companies must be diligent in accurately predicting future losses in their state so that they can cover all claims when disaster strikes. And we need rules governing insurance that foster the predictability that is critical to a healthy insurance marketplace.

BEAMAN FLOYD
Executive director
Texas Coalition for Affordable Insurance Solutions
Austin