Q. What is the downside of having to cut rates?

A. Carbine: We have nearly 17,000 policies in place. [With lower rates], we would have to write 24,000 policies just to keep the same premium level.

Q. What’s the financial impact on Coral and other insurers operating in Florida these days?

A. Carbine: Because we need to have a certain level of premium coming across the threshold, we have to write twice as many risks.

Our probable maximum loss -- related to catastrophes -- also goes up dramatically. That would have an impact on our [reinsurance] renewal premium next June.

I spent 40 years in reinsurance and let me tell you, what reinsurers will look at is exposure. Reinsurers then will apply a rate that will give them the premium they want for that exposure.

Q. Should the state not have meddled, though the desire to provide relief from higher insurance rates was well-intentioned?

A. Straker : This goes back to what a free market does and how it works on supply and demand. 2004 and 2005 were terrible years for reinsurers. But in 2006, the market brought new capacity. Everyone wanted to get into the game. And there were new [reinsurance and primary] companies that started to think, well, maybe the rates were adequate and Florida is the place to go.

The lead time for creating a new company in Florida is a year. Just as these new companies were ready to go live at the beginning of 2007, instead of letting the free market manage, the state stepped in.

There would been a multiplicity of new companies and the competition would have brought the prices down. That’s what we anticipated was going to happen.

We knew our prices were going to go down in 2007, but we thought it would be free market forces.

A free market works all by itself. It self regulates. If you do a good job and charge an honest price, you will succeed. If you don’t, you won’t.

SUSAN STRAKER

* Position: President and CEO, Coral Insurance.

* Past experience: Founded Laub Group of Florida, which engineered the first commercial residential (condominium association) JUA on behalf of Reliance National Insurance and Royal Indemnity in 1998. In 2003, began forming Coral Insurance.

* Education: Graduate of Fort Lauderdale High School, University of Florida and Florida Atlantic University.

JAY CARBINE

* Position: Vice President, underwriting and claims, Coral Insurance

* Past experience: Worked for General Re; served as president and chief operating officer of the reinsurance division of Armco Insurance Group; also held management positions with International Risk Management Group throughout the 1990s. He joined Coral Insurance's management team in 2003.

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