Tennessee’s P/C Market Mirrors Challenges Other States Face

Paula Flowers, the commissioner of Tennessee’s Department of Commerce and Insurance, recently set aside some time to talk with Insurance Journal Southeast regarding some of the industry issues impacting the Volunteer State.

Flowers was appointed by Democratic Governor Phil Bredesen to lead the Tennessee department, which performs a wide variety of regulatory functions and also houses the state fire marshal’s office.

A native of Monterey, Tenn., Flowers is an attorney who served as special counsel to the department’s TennCare Oversight Division before being named commissioner. She is a co-founder of the Nashville law firm of Farmer & Luna PLLC, and before that she was an associate at the Nashville law firm Waller Lansden Dortch & Davis.

From increases in several lines of the market to restructuring the process involved in fighting fraud, Flowers chats about where the industry is and where it may be in 2004.

Insurance Journal: How would you describe the current property/casualty market for independent agents in Tennessee?
Paula Flowers: Tennessee’s property and casualty market is experiencing many of the same pains that the national market is exhibiting. We have seen substantial increases in property and auto coverage rates this year to compensate for historical underwriting loss. Tennessee’s workers’ compensation rates have also increased and our assigned risk plan for workers’ compensation has a higher population than is desirable. Many independent agents across the state have suggested that availability of coverage in the property/casualty markets, particularly in the homeowners market, is becoming difficult and have suggested the implementation of a direct-assignment plan. The ripple effects of the failure of Reliance and Legion are being felt here in Tennessee, as well as the failure of three professional liability risk retention groups that insured doctors and lawyers here in Tennessee.

IJ: Are we seeing insurers in the state pulling out of or going into more markets currently and do you consider the state friendly to insurers wanting to do business there?
Flowers: We are seeing insurers becoming more cautious in their underwriting and rate setting in current markets, but have seen some new insurers enter, or gain significant market share, in specific lines. We are working aggressively on regulatory management systems and procedures to try to become even more friendly to insurers serving Tennessee’s consumers.

IJ: How has the department responded to help businesses and individuals with storms and other catastrophes that have hit the state in 2003?
Flowers: The department is multi-faceted, in that we regulate many industries in addition to insurance. When storms and other catastrophes have occurred, we have representatives who are available to answer questions and have conducted seminars and meetings with affected citizens to answer questions regarding insurance claims, contractor licensing, consumer affairs, and building code requirements.

IJ: Talk a little about the med-mal situation and do you see Tennessee as stable or reaching crisis status like a number of other states are?

Editor’s Note: To see the full interview, see the Jan. 26 issue of Insurance Journal Southeast. For more information on this magazine, which contains news for independent agents in Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee and West Virginia, visit www.insurancejournal.com/subscribe or e-mail subscriptions@insurancejournal.com.